Lean Principles How Ssc In Romania Apply Lean
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University of Bucharest –Business and Administration
Faculty of Philosophy
Specialization:
Diplomacy in the international economy
MASTER THESIS
Research Supervisor:
Prof. univ.dr.
NAME:
Surname:
Master Student:
NAME:
Surname:
Bucharest , 2017
University of Bucharest –Business and Administration
Faculty of Philosophy
Specialization:
Diplomacy in the international economy
Title: Lean Principles – How sector skills councils apply Lean principles in Romania
Research Supervisor:
Prof. univ. dr.
NAME:
Surname:
Master Student:
NAME:
Surname:
Bucharest , 2017
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TABLE OF CONTENTS
Contents………………………………………………………………………………………….4
Introduction…………………………………………………………………………………….5
Chapter I. Literature review –
The theoretical framework of Lean……………………………….…….…8
§1. Main concepts:…………………………………………………………………………….8
1.1.Thinking……………………………………………………….………13
1.2.Services,………………………………………………………….……23
1.3.Waste, value added and non-value added activities……………………29
Chapter II. Research methodology……………………………….…….38
Chapter III. Case study – How the Company that operating in Romania apply the Lean principles?………………………………………………………………38
§1.Oracle…………………………………………………….…….………40
§2. Hewlett Packard (H.P.) ………………………………………….……45
§3.Accenture …………………………………………………………..….52
Conlusion/Recommendations ………………………………………..…58
Bibliography………………………………………………………………………62
Annexes…………………………………………………………..………65
Lean Principles – How sector skills councils apply Lean principles in Romania
Abstract
Despite successful “lean” applications in a range of settings however, the lean approach has been criticised on many accounts, such as the lack of human integration or its limited applicability outside high‐volume repetitive manufacturing environments.The application of lean thinking has made a significant impact both in academic and industrial circles over the last decade. Fostered by a rapid spread into many other industry sectors beyond the automotive industry, there has been a significant development and “localisation” of the lean concept. Linking the evolution of lean thinking to the contingency and learning organisation schools of thought, the objective of this paper is to provide a framework for understanding the evolution of lean not only as a concept, but also its implementation within an organisation, and point out areas for future research. The resulting lack of definition has led to confusion and fuzzy boundaries with other management concepts. Summarising the lean evolution, this paper comments on approaches that have sought to address some of the earlier gaps in lean thinking.
INTRODUCTION
This overarching question will be answered through the development of respective sub-questions in the different chapters. For reasons of confined space and in order to forward practicality of the present thesis, when referring to sustainability in the chapters of the critical comparison and the case study research, we elaborate on the environmental dimension of socially responsible business behaviour. By no means do we reject the huge importance of the social dimension. However we incorporate this treatment since it is tightly connected to processes, which are considered intertwined with the Lean concept The contemporary competitive business environment is characterized by the evolution of technology and knowledge as well as the proliferation of production, distribution and monitoring systems for the provision of qualitative and valuable products to end users , the different categories of customers. This in turn poses mainly a great amount of uncertainty related to the strategic choices and competitive orientation of modern organizations and secondary has heightened implication for all modern business aspects such as planning, purchasing, production, logistics, business analysis, business control, auditing, marketing and market positioning. These conditions have created the need to develop and implement management systems that will recognize the systemic nature of business and will treat in a holistic manner the set of parameters that may deliver competitive advantage. This is the point in which we believe that the Lean concept interrelates with the sustainability dimension of corporate behaviour where both aim to deliver value to firm stakeholders.
Briefly put, Lean management could serve as a facilitator of instigating greater co-operation and alignment in the design, development and implementation, both intra-organizationally and on a supply chain level, of more environmentally friendly processes and products.The purpose of the present thesis is to uncover any possible synergies and interrelationsin terms of adding value to companies between Corporate Social Responsibility/Sustainability and Lean. In this sense, the objective is placed uponunveiling the strategic character and the reinforcing and supportive role of both concepts (Lean and Corporate Social Responsibility) into becoming more economically justified and efficient, offering benefits in terms of cost savings and economic effectiveness. In this sense, the following lines serve as a means of providing a developmental account and a thorough understanding of the current reality concerning the two concepts.In order to objectify and concretize the rather vague notion of value and provide a comprehensive yet elaborate understanding of the contribution of Lean to strategic advantage, we have framed the realization of value capture and appropriation through the competitive positioning framework.
Therefore it entails increased potential to provide tangible research results which can advance academic inquiry.In the following parts we elaborate on the development of each concept separately and continue with a critical comparison between them. More explicitly, in Chapter 3 we answer to the sub-question of ‘’How does the application of the Lean concept add value to a company and under what circumstances? Also we aim answering an equivalent question on the part of CSR and Sustainability activitiesand in what conditions.
The research project commences with the introduction and the outlining of our study context and the underpinning principles guiding our efforts. The overall research objective is to understand the way in which Lean contribute to business value. Therefore our main research question under investigation, which aims at depicting the overlapping nature of the two concepts can be summarised in the following lines: Which key contributions and how does a company expect from the adoption of Lean practices and sustainability activities? Briefly put, it seeks to provide insights into the ways and the circumstances that allow Lean to effectuate a strategic competitive advantage through the adoption of sustainability practices. .
These chapters embrace an inductive-deductive approach, hence they entail an abductive or else retroductive reasoning. Their contribution is twofold. On one hand they provide a detailed and up to date review of available academic work pertaining to both concepts and therefore contribute to the different literature sets. On the other hand, they explicate our different levels of induction and
deduction in our effort to frame the relevant knowledge and simultaneously serve as building blocks for the following conceptual framework. Therefore these are crucial steps in structuring and framing our intended field of research. The notion of value is further explicated in the chapters 1 where it is objectified in terms of competitive advantage. Moving towards Chapter 3 this framework is developed and presented. It constitutes a delicate integration and synthesis of the p
receding critical reviews. The issue with these two concepts relates to the fact that there are different works and literature sets that treat them
separately without providing a depictively justified reasoning for meaningful integration in order to build new models and subsequently test them through practical case studies.
Consequently the question that needs to be addressed could be included in the forthcoming words ‘’What are the unifying principles that underline both concepts in their contribution towards strategic positioning of a company?‘’.
CHAPTER I. LITERATURE REVIEW-
THE THEORETICAL FRAMEWORK OF LEAN
§1. MAIN CONCEPTS
Lean operating system concepts have been around for a long time. While frequently using different names, the fundamental concepts of Lean have been the subject of many industry and trade publications for many years . Many manufactures are therefore very well read about the theories of the Lean operating system. They understand the Lean concepts and the potential benefits to their companies . Eliminating waste is also nothing new. Just the idea of eliminating non-value- adding waste makes common sense. Most manufactureers have been trying to eliminate waste and make their operations as efficient as possible since the first day they opened their doors.
Lean operating system techniques are easy to read about and understand , but putting them into action on your own shop floor is not so easy.Because most manufactureers have long used computer-based MRP or other manual systems modeled after MRP- style planning systems for their entire careers, the application of Lean concepts in the real world of the shop floor may seem totally foreign to them.
The concept of management by walking around (MBWA) isn’t new. It wasn’t invented by the Lean operating system. MBWA is a popular management technique used by managers in many businesses. It is also a common technique used by Lean operating system managers.
The term "lean" was coined to describe Toyota's business during the late 1980s by a research team headed by Jim Womack, Ph.D., at MIT's International Motor Vehicle Program.
Eliminating waste along entire value streams, instead of at isolated points, creates processes that need less human effort, less space, less capital, and less time to make products and services at far less costs and with much fewer defects, compared with traditional business systems. Companies are able to respond to changing customer desires with high variety, high quality, low cost, and with very fast throughput times. Also, information management becomes much simpler and more accurate. ( https://www.lean.org/WhatsLean/)
The characteristics of a lean organization and supply chain are described in Lean Thinking, by Womack and Dan Jones, founders of the Lean Enterprise Institute and the Lean Enterprise Academy (UK), respectively. While there are many very good books about lean techniques, Lean Thinking remains one of the best resources for understanding "what is lean" because it describes the thought process, the overarching key principles that must guide your actions when applying lean techniques and tools.
In order to implement the demand phase successfully, the core implementation must:
Understand customer demand. It is need to spend the time upfront to understand customer demand troughtly. It is the foundation upon which you lean system will be built. If your customer is another functional area, you must work with them until you know their sequences.Colllecting accurate data is important. Determining customer demand for administration may be difficult, but it can be done.
Don’t attempt to micro-design the future state în this phase
You will not need to identify specific action items to implement this phase of the future state.
Be flexible : Tracking customer demand in the office may require constant adjustements in your plans for the future state . It is need to be flexible , not hold too tightly to any one set of ideas as being is a process of evolution. As people learn and grow, they will take more responsibility and make better decisions.
Create a plan that the whole team can agree on.
One of the best ways to make sure a plan will work in to get rapid buy-in . The team should fallow these few guidelines to make sure they agree on the plan:
-Restate the original problem and review the current-state map, as well as others discussed but not posted – and the reason why.
– Review problem –solving projects listed .
– Make final changes.
-Get buy-in from anyone.
– Post the map on the storyboard and update it as progress is made. Put it in a common area along with the team charter.
A lean organization understands the end value to a customer and focuses its processes to continuously increase
that value without waste. It does this via the following key principles:
• Respect for people: In a Lean organization, people are central to accomplishing the work of the organization and their knowledge and expertise are acknowledged. People in Lean organizations are central to defining work process issues and contributing to solutions.
• Specify value from the standpoint of the end customer: Lean organizations work to identify what the customer defines as valuable about their services, not what the organization thinks is valuable.
• Identify all steps in your process and eliminate waste:
This is accomplished through Value Stream Mapping(VSM)
.Multiple levels of the organization are involved with those closest to accomplishing the work providing detailed input.
• Make processes flow: Identifying processes, and eliminating wastes, allowswork to flow from start to finish to effectively provide value to the customer.
• Let customers pull value from upstream: Lean organizations work to understand client needs and deliver exactly what they want, exactly when they want it. In a pull system the customer defines what is valuable and pulls that value from the organization.
• Continuously improve: Continuous improvementis accomplished primarily through use of the scientific method in incremental steps using the Plan – Do-Study-Act (PDSA) cycle of improvement.
Lean systems can be traced back to the Toyota Production System (TPS) devised by Sakichi Toyoda, his son Kuchiro Toyoda (founder of the Toyota Motor Corporation) and the engineer Taiichi Ohno. They were so driven by their desire to reduce waste (Munda) and eliminate unnecessary production steps that they devised the TPS continuous and systematic approach to improve their manufacturing processes.
Since that time other similar systems and variations have been developed and promoted, such as Value Engineering (VE), Crosby Total Quality Management (TQM) and more recently Six Sigma, 3but Lean systems remains the most widely used. The term Lean Manufacturing is attributed to Womak and Jones. They first named and described the process in 1991 in their book “The Machine that changed the World,”1which detailed their research into the world's automotive industries (including Toyota). This was further refined in their book “Lean Thinking” which was first published in 1998.
The respect for people is further explained as “Respect means you hold people accountable to the system, following it and improving it (the notion of ‘kaizen’ or continuous improvement). Lean leadership is about enabling and empowering people. Lean leadership is about helping people grow professionally and personally, allowing them to take pride in their work”
Although there are defined tool sets to use and procedures to follow to be “authentically” Lean, over the last few years the term has passed into the global consciousness in the same way as the global acceptance of “hoover” (ie people buying a vacuum cleaner will often ask for a hoover and expect to see a range of brands — not just Hoover). So much so that the leading official Lean blog4avoids all of the technical points stating:“One way of defining Lean has two parts: Eliminate waste and non-value-activity (NVA) and have respect for people”.
Lean Manufacturing is essentially a repackaging of the Toyota Production System (TPS) . Most of the philosophy and tenets, as well as the methods, techniques, and tools of Lean are all found within TPS. Lean thinking is lean because it provides a way to do more with less – less human effort, less equipment, less time, and less space –while coming closer to providing customers with exactly what they want . In terms of lean manufacturing, anything that does not directly add value to the product is inefficient (waste). To make it more clear what is considered as wasteful, we have to explain what the term value means. Valuable work is the work that the customer really thinks is worth paying for (the product). In every particular operation there
is an element which is value-creating. Actually, only this element we can call work, and everything else is called motion. In its nature, motion is considered to be wasteful. Every part that is not being worked on is a sign of inefficiency. Toyota has basically split the waste into seven types: overproduction, operators waiting, excess transport, overprocessing parts, unnecessary inventory, unnecessary operator motions and defects. The concept of lean brings up new needs. In order to achieve these needs, a company has to establish new strategy. In order to improve current performance it usually has to redesign elements of its production system. Lean manufacturing approach offers tools for reduction of waste of resources
1.1.THINKING
In 1983, Showa Manufacturing, a maker of radiations and boilers, celebrated a one hundred anniversary. The firm had been steadily succesfull in the Japanise market and in the 1960 s had even been chosen to build a new heating system for the imperial palace in Tokyo. However, the world changed after the second oil shock in 1979, and Showa started to struggle. Demand for its industrial products slumped as Japanese firms cut back expansion plans and considered more modern concepts in heating. Equaly ominous, the cost structure at Showa, with its traditional Japanese commitement , and its 750 core employees, seemed to be stuck. Showa’s initial response was tipical of Japaneese firms in these circumstances. To raise the cash to avoid layoffs it sold the valuable real estate under its center city offices and main plant and began relocating its production facilities to cheaper but more modern sites neaby in hopes of gaining efficiences . It also diversified into ornamental castings for bridge rallings and began to implement a plan for exporting its cast-iron boilers to America to take advantage of the weak yen.
When Showa’s original office and manufacturing complex in crowed Fukuoka City was fully relocated in 1983 to new plans in suburban Umi and Koga , the management expected its fortune to change. Instead, the declined continued . The production system in the new plants was in fact the same as the old. Proces vilages for casting, cleaning, stamping, welding, painting and assembly were run in the batch mode with long intervals between tool changes.This practice credated mountains of parts of which were then taken to central stores before reshipment to the next processing step. Orders tooks months to work their way throught the system, as chased by expediters with hot lists. (It was the familiar word of every firm we’ve look at before the advent of lean thinking). In addition, the cost of starting exports was high and the diversification into ornamental castings pitted Showa against larger firms with established reputation in the building trades.
By 1995, Showa was finally reaping the full rewards of its conversion to lean principles driven by a lean strategy. Showa quickly improved its productivity and reduced its space needs and inventoirea sfter 1984. These steps stemmed the company-threatening and inventories after 1984. These steps stemmed to company –threatening losses and bought vital time to consider what to do next (just like similar steps at Pratt& Whitney and Porche), yet as of 1991 the firm was still not makingan adequate return because it was selling products into declining markets.
As the new business units gradually found their markets and product development and order –talking were improved after 1991. Showa began to take off , just as the rest of the export –depended Japanese economy fell into a prolonged slump . Aa typical Japanese manufacturing profits fell by 70 percent after 1989. Showa, now selling 100 percent of its output into a steagnanat domestic economy, lifted its profits by nearly 100 percent compared with 1989.
Sales themselves rose nearly 33 percent in the first half of the decade , against a slumping economy.
The Kaizen management originated in the best Japanese management practices and is dedicated to the improvement of productivity, efficiency, quality and, in general, of business excellence. The KAIZEN methods are internationally acknowledged as methods of continuous improvement, through small steps, of the economical results of companies. The small improvements applied to key processes will generate the major multiplication of the company’s profit, while constituting a secure way to obtain the clients’ loyalty/fidelity. The KAIZEN management represents a solid, strategic instrument, with a view to reach and surpass the company’s objectives. The “5S” technique represents a fundamental technique which allows the enhancement of efficiency and productivity, while ensuring a pleasant organizational climate. The scientific paper presents in a concrete way a study regarding the application of these concepts in a real organization which builds its business success on the phenomenon called knowledge.
Kanban is based on a very simple idea. Work In Progress (WIP) should be limited and something new should be started only when an existing piece of work is delivered or pulled by a downstream function. The kanban (or signal card) implies that a visual signal is produced to indicated that new work can be pulled because current work does not equal the agreed limit.
This doesn’t sound very revolutionary nor does it sound like it would profoundly affect the performance, culture, capability and maturity of a team and its surrounding organization. It is remarkable that it does. Kanban seems like such a small change and yet it changes everything about a business.
Jidoka is translated as,, autonomation’’. It is a word that consists of two concepts. On the one hand is the autonomy of control of the equipment (literally translation of jidoka). On the other hand is automation of the processes in a simple way.
Since few unnamed production systems exist, jidoka has taken on an additional character of integrating the human into an automated system so that the human is well integrated into the system.
One of the most popular visual control tools is a system called andon which typically uses ,,alarm lights’’. These lights are used to indicate or warn workers of an activity that going wrong.
Andon also can be used to detect material shortages. The worker, by turning a light on, can let a supervisor know the truble spot on the line is causing the problem .
Dr. Shigeo Shingo is known as the father of SMED (developed in the late 1950s) and Poka-Yoke, and is also known for developing the Just-in-Time (JIT) concept. He used SMED to reduce the lot size of Toyota cars and the set-up time of hull assembly on a 65,000 ton super tanker, setting a record in shipbuilding in 1956.
Single Minute Exchange of Dies, commonly known as SMED is a concept to reduce changeover time. A few benefits of SMED are:
Increased availability/uptime of machines/lines
Increased throughput with NO capital investment
Standardized changeover
Short changeover times help in having more frequent product (or flavor or size or alloy) changes and smaller batch quantities.
By increasing the number of changeovers, we can carry less inventory of raw materials, supplies and finished goods.
Become more efficient and identify opportunities for continuous improvement.
Standardized Work is the best know method for manufacturing products at a production worksite.
The principle behind the Standardized Work is to perform efficient production, in a consecutive sequence, by focusing on operator’s movements and systematically combining work tasks.
To standardize a method is to choose out of many methods the best one, and use it. What is the best way to do a thing? It is the sum of all the good ways we have discovered up to the present. It, therefore, becomes the standard.
Today’s standardization is the necessary foundation on which tomorrow’s improvement will be based. If you think of “standardization” as the best you know today, but which is to be improved tomorrow – you get somewhere. But if you think of standards as confining, then progress stops. (Henry Ford – Today and Tomorrow).
Finally, applying lean management principles helps to drive change through the organization. Lean management gives the organization a set of goals and a purpose, which leaders can use as they strive for excellence in the development process and communicate these expectations to the rest of the organization. Applying lean management standards changes the behaviors, practices, and habits of teams. This is the only way to change the culture of a development organization. For this reason, lean must be implemented beyond the team level to all areas of leadership.
Using these principles, design teams achieve innovative outcomes because the method ensures an optimal solution to key design problems.
In the process, the design team will have designed out the wastes that are universal to all designs and, by applying the key lean principles of flow and pace to the process, will have found the solution faster than using phase- gate-style development. (Chapter 3 explores the topic of learning cycles as a way to create pace and pitch in the processes of development and innovation.)
We work with teams that are on the journey to incorporate all six principles into their development process. Often one team will demonstrate a best-practice behavior, which is shared with other teams. The process of showing one team another team’s progress (or benchmarking one company against one’s own company) is called a gernba walk. In Japanese, gemba means “the real place.” A gemba walk entails going to the actual place, seeing the actual process, and talking to the people doing the actual work. Often this is referred to as the three actual or the three Ps for place, process,
and people. On a gemba walk, the students go to see the place, view the best-practice process, and talk to the real people involved in the process. Over time, the process changes are shared and disseminated throughout the entire organization. This allows the lean culture to spread.
These six principles define a road map that all companies can apply to create a lean development culture. This change is a journey. It will not happen overnight in any organization. However, with attention to the details and by following these principles, change can be achieved. Cultural change is a difficult thing to drive. On a family trip, if the parents suddenly say to their children, “We will have a new culture of harmony in this family,” in all probability nothing will change. For the children and parents to move into a new culture, the underlying behaviors must change. The children must learn to get along. The parents need to create an environment of harmony and model appropriate behavior.
Your journey can begin by learning and applying these principles within your company. To help you visualize what the future might bring, here is our vision:
By applying the principles of innovation, expect the solutions to be unique in the marketplace.
By implementing fast learning cycles, the solutions will be developed with less rework.
Customers will be more satisfied because the team will have iterated more solutions and optimized multiple ideas into a solution that meets the visible and the hidden wants and needs of the customer.
Teams practicing lean development do not stop at examining only one or two ideas, but instead simultaneously explore a dozen or more ideas, which are examined in detail and documented. Of course, some concepts will quickly be deemed no-win solutions for your organization and the customer,
and will be killed rapidly. However, all ideas will be visible to the entire team, and the process of learning what works and what does not will be documented as the team works through the learning cycles and regularly shares results with management.
By applying lean methods to broken process steps, the whole process becomes more efficient and effective; therefore, the speed of developing and innovating increases. One leader described his experience of moving through the early conceptual and feasibility phases of a project as “moving at lightning speed.” Another business area improved its cycle time of development by over 50%, from 24 or more months to just 6 to 18 months; and the information technology teams routinely complete projects in half the time it previously took.
With the principle of knowledge capture, team members will document and share their knowledge within the team and with the broader organization; therefore, the organizational knowledge bank will increase. Teams will be able to easily go back and retrieve both ideas generated and the details on the refined solutions. It also helps to expect teams to document their solutions as part of the process, instead of at the end of the project. In this way, knowledge is captured continually as the team moves through learning cycles, and time is not wasted recreating and rediscovering what has already been learned. This boosts the productivity of the team and the organization as a whole. Management knows the progress made and will know where to go to see the results of the process.
Of course, the power of innovative lean development is realized when all of the principles are attended to and moved forward together. Although each principle is dealt with separately in these pages, when all are integrated the organization will enjoy the speed, quality, and improved cost that can be achieved by implementing innovative lean development.
While lean techniques focus on speed and increasing the amount of work completed in a process or value stream, Six Sigma focuses on improving the quality of each process to achieve a better result. Combined, they strive to offer the best business approach for satisfying customers.
By utilizing the tools of lean to eliminate waste and the tools of Six Sigma to focus on quality results, LSS offers a powerful method of meeting customer’s needs. The result is:
Better execution by linking strategic plans and operational improvements
Customer loyalty by focusing on customers’ needs
Greater returns by reducing operating costs and delivery times
Ultimately, the customers get what they need, want, and value. Your organization gains recognition, loyalty, and success. The lean philosophy in two words: eliminate waste. This includes wasted time, human action, inventory, equipment usage, and materials.
Unlike lean, the Six Sigma philosophy targets the elimination of manufacturing defects through process knowledge. It focuses on mechanisms designed to compare customer need metrics with operational processes to ensure alignment.
Therefore, using a structured statistical analysis approach, we can base decisions on data, while actions focus on customers’ needs.
The lean methodology focuses on streamlining each process to determine how to eliminate anything that does not add value for the customer. The goal is to “design out” inconsistencies while ensuring the process is as flexible as necessary to eliminate stress or “overburden.” By integrating the principles of business, engineering, and statistics you achieve quantifiable results.
Ultimately, lean means doing more with less – effort, equipment, time, space, and money – while giving customers exactly what they want.
Figure 1 . Sales, productivity and space at Showa – using Lean principles comparation between spring and summer of 1884.
1.2.SERVICES
As far as models for the effective and efficient management of services are concerned, our first point of reference is Prof. T. Levitt's proposal for the industrialisation of services . He maintained that the quality – effectiveness – of services would improve quite clearly if they were approached with the sam e "industrial" mentality, or rather "changingpeople and coincidence for technology and system . This logic of "industrialising" certainly remains valid, only now it should be achieved not by applying the industrial practices of the time, which correspond to mass production models, production based on trade-offs, but rather more modern practices, those of lean operations, which enable efficient mass production practices to combine with flexible approaches from traditional artisan production, thus giving rise to the lean service. The magnificent performance advantages that a lean producer has over typical as producers have been widely described . The principle of lean thinking means “moving towards the elim ination of all waste in order to develop an operation that is faster, more dependable, produces higher quality products and services and, above all, operates at low cost” Its prim ary goal is, therefore, to increase the efficiency of production by means of the complete elimination of waste understanding as waste all that – time, cost, work- which does not add value from the point of view of the customer.
Lean performance is total internal lean optimization process. To develop a lean supply chain, there is need to apply lean to the supply chain as a system (Phelps, 2004). Lean is an
approach that identifies the value inherent in specific products, identifies the value stream for each product, supports the flow of value, lets the customer pull value from the producer, and pursues perfection. It is through this holistic, enterprise-wide approach to lean implementation that the theory extends beyond functional strategy to a broader supply chain strategy employed by the company . The strengths of lean approach are lean's more immediate and practical focus on waste, flow and flexibility . A lean organization optimizes the flow of products and services to its customers. It delivers customer value by:Reducing lead times , Improving quality . Eliminating waste , reducing the total costs , engaging and energizing people (Industry Week, 2010). Continuous Business Improvement (2010) ha
s introduced 20 keys to world class competitiveness and total workplace improvement which are derived to the lean performances on better quality, faster throughput and cheaper cost.
Service operations now comprise more than 80% of the GDP in the United States and are rapidly growing around the world. Even within manufacturing companies, it’s common to have only 20% of product prices driven by direct manufacturing labor—the other 80% comes from costs that are designed into the product or costs associated with support and design functions (finance, human resources, product development, purchasing, engineering, etc,).
Moreover, in service applications, the costs related to work that adds no value in your customers' eyes {“non-value-add”) is higher than in manufacturing, in both percentage and absolute dollars. The revenue growth potential of improving the speed and quality of service often overshadows the cost reduction opportunities. I or example, as you’ll see in the case studies later in this book, work that adds no value in your customers’ eyes typically comprises 50% of total service costs. This represents enormous “white collar” potential for achieving significant speed, quality, and cost improvements, all of which can give organizations a major strategic advantage over their competition.
Though these organizations come from a range of sectors, they represent significant service opportunities for applying Lean Six Sigma. Their goals and objectives may he different, their needs range from providing
Many people in service environments have heard about Six Sigma, the improvement methodology focused on achieving extraordinarily high levels of quality that has contributed well-publicized millions to the bottom line of companies like GE, Allied Signal, ITT, and Lockheed Martin. In contrast, few people outside manufacturing know much about Lean applications. Which is the problem. People hear “Lean” and automatically think “manufacturing” because that’s the way it’s always been used. In fact, Lean creates process speed (by reducing cycle time) and efficiency (minimal time, capital invested, and cost) in any process: medical care to patients to providing logistical support for manufacturing, but they are all in the vanguard of a new movement. They realized the most effective way lo achieve their objectives was by integrating Lean and Six Sigma principles and methods to improve service operations
• Bank One’s use of these principles and methods started with an initiative in their National Enterprise Operations called Focus 2.0. Launched in February 2002, it began with a series of carefully selected, strategically important projects. As a result of their efforts, the NEC group has the opportunity to generate millions of dollars in revenue per year due to improvements in one operation and saved thousands of dollars in cost avoidance and waste reduction in others.
Lean Six Sigma for services is a business improvement methodology that maximizes shareholder value by achieving the Fastest rate of improvement in customer satisfaction, cost, quality, process speed, and invested capital. The fusion of Lean and Six Sigma improvement methods is required because:
Lean cannot bring a process under statistical control
Six Sigma alone cannot dramatically improve process speed or reduce invested capital
Both enable the reduction of the cost of complexity
Ironically, Six Sigma and Lean have often been regarded as rival initiatives— Lean enthusiasts noting that Six Sigma pays little attention to anything related to speed and flow, Six Sigma supporters pointing out that Lean fails to address key concepts like customer needs and variation. Both sides are right. Yet these arguments are more often used to advocate choosing one over the other, rather than to support the more logical conclusion that we need to blend Lean and Six Sigma.
How is it that Lean and Six Sigma are complimentary? Chapter 2 goes into more detail about what each of these methodologies brings to the party, but here’s a quick overview:
Six Sigma:
emphasizes the need to recognize opportunities and eliminate defects as defined by customers
recognizes that variation hinders our ability to reliably deliver high-quality services
requires data-driven decisions and incorporates a comprehensive set of quality tools under a powerful framework for effective problem solving
provides a highly prescriptive cultural infrastructure effective in obtaining sustainable results
when implemented correctly, promises and delivers $500,000+ of improved operating profit per Black Belt per year (a hard dollar figure many companies consistently achieve)
Lean …
focuses on maximizing process velocity
provides tools for analyzing process flow and delay times at each activity in a process
centers on the separation of “value-added1' from “non-value- added” work with tools to eliminate the root causes of non-value- add activities and their cost
provides a means for quantifying and eliminating the cost of complexity.
For the most part then, the 'leanness'—in the sense of doing more with less—seems to be in the non-customer-contact parts of the process, what it is called the 'quasi-manufacturing' part. And studies in lean services since it has tended to continue in that vein, reporting improvements in the 'technical core', back office processes such as preparation of sales quotations in a manufacturing firm insurance policy application processing, lean application processing finance office processes in local government and even preparation and distribution of animal feed in a safari park . Although these settings, in the main, might be classified as services by virtue of being in service sectors, the processes studied are clearly amenable to lean approaches as they involve flows, inventory (of paperwork or animal feed, etc.), and, crucially, are insulated from the customer. (Indeed, that is the very purpose of standardized application forms for loans, insurance policies, and the like.) It is no surprise, then, that the authors in these examples conclude that lean approaches can be used in 'service' settings.
Although these translations of lean manufacturing approaches to back office service operations are interesting in their own right, Piercy and Rich (2009) and Staats et al., writing on lean approaches in call centres and software engineering respectively, focus on additional issues. Piercy and Rich emphasize the group problem-solving and continuous improvement aspects of lean, and see that co-located teams can indeed work effectively in this respect in service settings as they do in the typical production facility setting of most studies of lean. Many of the philosophies and methods of lean production also apply to knowledge-intensive services, but the less fully specified nature of work elements in knowledge work lead to some limitations on the applicability of the full range of lean methods. Interestingly, both of these studies draw attention to the importance of co-located workgroups in resolving problems and or planning and controlling activities that are less susceptible to ex ante specification, suggesting that there are limits to the extent to which lean services can be geographically dispersed.
1.3.WASTE, VALUE ADDED AND NON-VALUE ADDED ACTIVITIES
A main element of the Lean financial model presented is based on encoding actions that are perceiveded waste within the Lean philosophy; it has been shown how the model benefits from this categorization. However, we acknowledge the literature debate on this topic and will briefly address it.
The Lean financial model renders different types of available capacity explicit. This is done intentionally to understand the potential use of their capacity. Acting oil tins we can improve time consumption.
We distinguish between available bottleneck capacity, other labor available capacity and inbalance capacity. Other labor-available capacity is the capacity available in non-bottleneck labor resources, and the imbalance idle capacity comes from the activity path in which cells cannot be balanced completely with each other, or in which cells cannot be balanced internally. Only if there is available capacity at the bottleneck is it possible to increase value stream activity. In the example schedule there is very little available capacity at tfie bottleneck resource, and not enough to run another batch.
Process Steps that Create Value. A value stream encompasses all the actions both value-added [VA] and non-value-added (N VA) that are necessary to bring a service or product from concept to development, to “manufacturing” of the service, to the receipt of payment or completion of the transaction. Once value is specified by thinking as the customer, the right process (processes that only add value to the product, meaning a process that is “waste-free”) the value stream consists in the following activities:
Process steps that create value and those process steps that have no value but are necessary, due to the current state of the environment (documentation) or system (organization culture, organization tradition, etc.) needs are considered value-added steps.
All those process steps that create NVA activities and therefore should be eliminated.
Lean and concurrent engineering (CE) are widely acknowledged business process improvement strategies. These strategies can improve processes, reduce costs, and cut waste enabling organisations to remain competitive. Lean manufacturing offers an enterprise-wide methodology that improves reliability and flexibility while reducing lead-times and inventory carrying costs. Companies in manufacturing and service sectors are focusing on integrating lean manufacturing methodology with other applications, so that, all their systems and processes are aligned.
Bowenconfirm their hypothesis that the impact of Activity Based Costing on performance is mediated by world-class manufacturing They argue that lean facilitates a more accurate identification of cost drivers associated with non lean-adding manufacturing activities and as a result supports a better implementation through a more focused resource allocation and cost control, Also, he argue that encoding activities, in the form of value-adding or non-v.ihiv-adding, are not enhancing decisions on cost reductions, the reason being that the cost reduction of value-adding activities is worth just as much as the cost reduction of non-value-adding activities. In addition, they believe it is no easier — a priori – to reduce the costs of non-value-adding activities than of value-adding activities, e.g. industrial engineers reduce costs in value-adding activities on a daily basis by increasing machine speed. Instead, they propose a four-category approach which divides the activities between those required by the products and those not required. The required activities are divided into whether they can be optimized or not, and the non-required activities.
Therefore, as the tool problems registered on the visual board in cell l arise, and the cell loses time equal to one batch,it may be argued that the cost of waste in our model fails to represent the opportunity costs. Opportunity costs are by definition equal to the contribution margin lost with the above-mentioned batch. The increased scrap level reduces the contribution margin as there are (potential) customers for these goods. This in turn changes the cost of waste so that it becomes the opportunity cost of waste including the lost contribution margin. A calculation of opportunity costs would ho fruitful in assessing the total cost of Waste. Nonetheless, to keep the example simple we have not included the explicit calculations in this presentation.
Value stream mapping eases the Lean transition. Done right, Lean can make real improvements to manufacturing and administrative operations. Done wrong, it can be what the Germans call Schlimmbesserung: “a so-called improvement that just makes things worse.”
One good way to obtain a new perspective on the plant’s operations is by using a tool called value stream mapping. In essence, mapping the value stream means following the product or product family from beginning to end. Each value-added and non-value-added step is noted and timed. It may look simple, but this kind of attention to what adds value can be eye-opening, says Dave MacDuffee, an industrial extension specialist. “Managers may feel they know their plant inside out, but doing the mapping can help them to better see that value-added time.” Value added (VA) activities are those that customers are willing to pay for. Value-added is also known as customer value-added (CVA). In contrast, non-value-added (NVA) are all those activities required by a business to execute work that adds no value from a customer point of view and that customers are not willing to pay for. Non-value- addcd activities are also known as business non-value-added (BNVA). Non-value-added is all those activities that can be categorized as “waste.” Non-value added activities are those that add no value to customer such as waiting time and movement between processes, or not required for legal, financial, safety, environmental, or other reasons. People who are embedded in a process day by day and have a desire to become Lean, find it difficult to see the big picture. What becomes difficult is learning to see the flow. Value stream mapping is very simple to do once you see the flow.” Celine Yamada Nomoto, Lean expert, agrees when she said: “We mapped a product family during the training, the next day, after the training was over, we went back and did another product family ourselves.” She credits consulting instructors for that rapid progress. Consulting instructors won't just give the participants the one answer to a problem; they’ll describe other companies and how they approached the problem. They describe available choices and options. And if you have a question, they call back with immediate feedback.
To construct the value stream, imagine a flowing river where water always runs smoothly, a river in which downstream is consistently receiving what flows from upstream with little or no effort. Now, imagine each process in the organization as a component of this river as it passes its output to the next downstream activity or internal customer. We define the process that is the farthest downstream as the customer who buys the product/service, transaction, and service produced by the organization. Just as many rivers flow across a continent into the ocean, there are many value streams that flow within an organization before reaching the customer.
Customer relationship management (CRM) is a term applied to processes implemented by a company to handle their contact with their customers. CRM is used to support these processes, storing information on customers and prospective customers. Information in the system can be accessed and entered by employees in different departments such as sales, marketing, customer service training, professional development, performance management, human resource development, and compensation. Details on any customer contacts can also be stored on the system. The rationale behind this approach is to improve services provided directly to customers and to use the information in the system for targeted marketing and sales purposes.
Knowing that Lean applies to the entire organization, not only in manufacturing, but also in the administrative areas we will first review the Toyota production system. Waste normally includes NVA activities and is known to Lean practitioners as to the “seven wastes”. Taiichi Ohno suggested that these NVA accounted for approximately the 95% of all costs in non-Lean manufacturing environments. Remember from Chapter 4 that these wastes (TIM WOODS) are as follows:
Inventory — excess inventory, related to overproduction, is the inventory beyond that needed to meet customer demands. Remember that overproduction negatively impacts cash flow and uses valuable floor space.
Motion — unnecessary motion caused by poor “workflow” (movement of people, material, or machines during process activities).
Waiting — waiting for material, information, equipment, parts, tools, diagrams, instructions, or signatures. Lean demands all components and resources on a just-in-time (JIT) basis.
Overproduction — the Lean principle is to produce on the basis of a pull system (Chapter 4) producing only what customer demands.
Overprocessing — overprocessing is related to inventory; it is the inventory beyond that needed to meet customer demands. The objective is to process products or services just as the customer orders them. Anything beyond this “standard” uses valuable labor and material.
Defects — production defects and service errors wastes resources, materials, overhead, and so on; materials consumed, labor used to overproduce, rework in redoing what went wrong the first time, and labor and cycle time required to address customer complaints. In other words, defects include everything related to poor quality, scrap, rework, and related activities.
Skills — underutilized skills include mental, creative, and physical skills and abilities wasted because of poor workflow, project management, organization culture, personal agendas, large amount of temporary workforce (constant retraining), lack of training, lack of skills, lack of experience, and other related factors.
The customer might ask the following questions:
What is the problem that impacts me (the customer)?
Do the stakeholders understand the problem?
Stakeholders understand and agree to the problem and the impact to business?
Do the stakeholders agree that fixing the problem is critical to the business?
Are my needs (the customer’s) identified?
Are the key parameters to be fixed identified?
Once value is determined, the next step is to identify the correct process. The correct process is one that only adds value to the product, a waste-free process. The value stream for a product should contain
Steps that create value
Steps that create no value but are necessary (as specified above)
Steps that create no value and therefore can be eliminated.
The elimination of waste is critical to Lean. This chapter encourages the extension of the fundamental Lean concepts of demand, flow, and leveling of manufacturing processes to encompass all organization areas by creating a common understanding, daily use and application of these Lean principles. Value stream management (VSM) is a process for planning and linking the Lean initiatives through a systematic data collection and subsequent data analysis. Eliminating wastes and promoting a smooth flow of information and work reduce organization costs.
A value-added activity transforms the product, service or transaction in a way that is meaningful to the customer. In other words, value-added activities are those activities that are valuable from the external point of view of the customer. Non-value added activity is “we do this because the boss wants it.” Frequently these tasks have no value to the customer.
The customer who wants to buy the right product with the right capabilities at the right price all the time determines “value.” This product must be “right” every time from design to manufacture and from manufacture to delivery. Each of the operations must be “error-free.” Lean organizations strive to make their processes right the first time by eliminating waste. By linking value to customer requirements, the following questions can be asked to review the value for the customer as it relates to the product.
Steps that create no value and are not required for the process are labeled for elimination; then any necessary NVA activities are labeled for improvement. At this point, detailed process maps should be generated for each product and product category. Brainstorming sessions are used to confirm the team’s conclusions as to which steps contain value, which steps contain no value but can’t be eliminated, and which steps should be eliminated.
To eliminate waste, the type of waste must be identified and where and under what conditions it is occurs. In this example the organization doesn't have an automated procedure for documenting processes. Thus, most of the processes are in managers' desks where others in the organization have no access to the documentation. In manufacturing, one of the most frequent waste types is overproduction. This waste occurs when more products are produced than are required. It is important in manufacturing because when demand slackens, overproduction creates unsold inventory and byproducts associated with it such as: extra handling, extra space, and extra paperwork. Unlike overproduction, the waste from waiting is usually identifiable since idle workers are visible to all.
Organizations can profit from learning to think in terms of Lean. The main goal of Lean is to eliminate waste. Lean attacks waste by shipment. Lean enables organizations to eliminate waste and produce more when value is added at every step in the process. The value of any product is defined by customer needs and not by any of the NVA activities of the supplier of producer. Lean is a manufacturing philosophy that decreases the time between customer order, product build, and shipment by eliminating the sources of waste. The examples in this chapter demonstrate how the Lean effort can be directed into removing excess of inventory and increasing “pull.” On one hand. Lean identifies the seven deadly wastes, “defects,” while the “pull” system ensures that the product is made at the same rate at which it is being sold. From the supply chain viewpoint, a pull system flows resources into a production process by replacing only what has been consumed. On the other hand, value stream ensures that all product units “flow” to customers as smoothly as possible. In the real world, this ideal situation rarely exists as there are shortcomings such as poor documentation or restrictions within the process that impede this desired smooth flow. The objective of Lean is not to make the workforce work faster, but rather to streamline the workflow so that it moves more quickly through the value stream. Lean concepts utilize the proper thought maps and Lean tools to make this downstream work flow as smoothly as possible. The principle of Lean thinking is illustrated in Figure 1.1.
This step focuses on rapid product flow (RPF). Waste is identified with specific steps of the process and is eliminated. Non-value-added activities are identified and eliminated by physical changes to physical layout. These involve human and other resources such as fax (facsimile), personal computers, and telephones (landline and mobile). Transactions should be laid out in cells emulating factories to reduce distances between specific products such as loan applications, car loans, and mortgages. Value stream maps (VSMs) show the flow of the transaction or material, paperwork, and information through the process. It is at this point that Lean implements 5S (a tool that reduces the hidden slack produced in manufacturing a process). Value stream maps focus on identifying infrastructure inefficiencies and waste at the organization process level. Value stream reduces lead time, improves service quality, and reduces rework, scrap, and inventory levels and therefore reduces indirect labor costs.
Often value stream maps capture the current process and thus may not represent all the variations of the process or the evolution of the process over time. The value stream map does not typically capture the causal structure, but is not restricted from visually documenting causes of waste, bottlenecks and other relevant cycle time information delays. Transaction and service areas provide enormous and frequently overlooked opportunities for improvement.
A panel of national consulting firms (Accenture, KPMG, PricewaterhouseCoopers and PA Consulting) was retained to provide expert advice to AHSs on undertaking process re-engineering and to facilitate redesign working parties. The firms also assisted in coaching local hospital managers to give them the skills necessary to implement the solutions. They brought a range of business process redesign and re-engineering methods to the CSRP, including “lean thinking”, “six sigma” and the “theory of constraints staff appreciated the neutrality of external facilitators who were often able to overcome territorial behaviours.Knowledge management was a key part of the program. It was facilitated by regular meetings of senior executives and clinicians, and by workshops on tackling common problems. The program office presented redesigned models of care in easy-to-grasp formats and regularly broadcast and celebrated successes in redesign. The new models of care were accompanied by implementation toolkits available on the Australian Resource Centre for Healthcare Innovations website. In addition, the Human Services Network, developed by the NSW Government was used for establishing communities of common interest.
CHAPTER II. RESEARCH METHODOLOGY
CHAPTER III. CASE STUDY – HOW THE COMPANY THAT OPERATING IN ROMANIA APPLY THE LEAN PRINCIPLES?
Lean companies are familiar with the concept of assigning standard work to individual workstation and having employees flex to the workstations to perform the work rather than bringing work to a personal workstation. The purpose of standard work is not to turn employees into mindless robots or to allow only the complection of repetitive tasks. Standard work has several purposes to document the current best practice by identifying the one correct way to complete each task, to provide knowledge benchmarking for others, and to encourage continuous improvement of a process. Lean business strategy requires continuously improuving standard work to have a minimum of non-value- added work, causing each process to be efficient as possible.
The purpose of this paper is to develop a waste framework for motor carrier operations by adapting the classical waste framework, and furthermore, to validate it by collecting empirical data from several motor carrier operators.
Design/methodology/approach
The chosen approach includes three steps, starting with analyzing qualitative data from a literature review.. The iauthors were experts from carrier operations, the lean field, carrier technology providers and carrier service buyers. The findings were validated with qualitative and quantitative studies at five motor carrier operators.
Findings: The finding of this paper is a waste framework adapted to motor carrier operations that has been based on the classical 7 waste framework. This provides a structured framework of inefficiencies found in motor carrier operations.
Originality/value: Previous literature is scarce on both holistic approaches to describing waste in carrier operations and in‐depth studies of day‐to‐day transport operations. It is also a novel approach to use a waste framework for ,,transport operations.´´
The fundamental concepts of lean thinking are similar you follow them on your home or in the projects. These principles involve improving all processes in each phase of the project to gain incremental improvement , therby resulting in a significant overall improvement for the entire project.
Advanced project leaders are lean thinkers , and they belive in applying the Science of Simplicity) to every project they undertake. They are not limited by the eight wastes but look at all wastes than prevent them from creating value for their customer, within the legal and moral boundaries. Advanced project leaders understand that if they do not eliminate the waste from their projects, they face a far greater waste. Project leaders are those who have undergone a paradigm shift from wanting their resources to work faster to leaders who want their resources to work smarter – to focus on eliminating the waste and thus use their time to focus on adding value to the customers.
§1.ORACLE
In 1977, Larry Ellison and two others founded what became Relational Software Incorporated (RSI) with the expressed purpose of bringing to market the world’s first commercial relational database management system. They were inspired by Codd’s 1970 paper describing the relational model and the 1974 paper describing SQL. and they decided to develop from scratch a commercial product that was as compatible as possible with the prototype being developed at IBM’s research facilities. Ellison’s vision was to implement a SQL system on small minicomputers, and he correctly anticipated that in addition to the novelty of a relational database, IBM compatibility would be attractive to the market. Indeed, so complete was their commitment to strict compatibility with System R that Larry Ellison himself called Don Chamberlin at IBM to request the error numbers that the system used. Early demonstrations of ORACLE often included the “underpaid managers" query used to illustrate the power of the IBM System R prototype. ORACLE was small in size and lean in resource requirements compared to System R, which ran on large, water-cooled mainframe computers.
There have been many implementations of SQL since the introduction of ORACLE back in 1979, and the commercial success of relational technology is extraordinary. Perhaps surprisingly, it took a while for IBM to benefit from its research on relational database management and its development of SQL. Although Codd’s work was published in 1970 and the SQL language was first described in 1974, IBM took many years to bring to market its first SQL product. It wasn’t until 1981 that IBM introduced SQL/DS (which used much of the original System R prototype code) for the DOS/VSE and VM operating systems. In 1985, IBM released the first version of DB2 for mainframes running MVS, though it was careful to position it as suitable only for departmental applications with predominantly decision support requirements, so as not to compete with its flagship hierarchical system IMS. But because of IBM’s dominance in the IT industry at the time, these announcements greatly accelerated the acceptance of SQL and relational systems, as it became clear that SQL would become a de facto industry standard. In 1979, RSI released the first commercially available relational database, ORACLE . The name ORACLE was taken from a project Ellison and his colleagues had worked on for the U.S. Government. Version 1 of ORACLE was an internal prototype, so the first commercial release was ORACLE Version 2. The SQL implementation in ORACLE V2 was reasonably complete for its time, as it included joins, subqueries, and views, as well as a unique language extension for processing hierarchies, the CONNECT BY clause. The next major version added innovations like an Outer join, a date/time datatype and numerous built-in functions.
The system's first customers were successful in deploying simple departmental applications, mostly for decision support rather than for mission-critical transaction processing requirements. Many of these early users of ORACLE were so impressed with the power of the relational model and the ease of use SQL provided that they often overlooked many of the reliability shortcomings of the early releases of ORACLE. RSI, which changed its name in 1982 to Oracle Corporation, began to grow very rapidly, doubling each year for 10 years, Oracle established its present headquarters campus in Redwood Shores, California in 1%9> One of the small ironies of the database world is that the closest airport to Oracle’s headquarters is in San Carlos, and it sports the three-letter code SQL.
Lean Scheduling Solution is the first and only offering that unites Lean and Critical Path Method (CPM) approaches to achieve exceptional project and business outcomes. The cloud-based, mobile-enabled solution automates and simplifies Lean to optimize its impact—facilitating the precise coordination, commitment, and community required for success. It also harnesses the power of Oracle’s industry-leading Primavera P6 Enterprise Project Portfolio Management solution to deliver the enterprise-level visibility and control essential for CPM. The bottom line: complete coordination and command for more successful and profitable projects.takeholders in the construction and engineering ecosystem grapple with unprecedented requirements—ranging from demands for faster builds and higher penalties for missed deadlines to a growing shortage of skilled trade resources, which drives up costs, erodes margins, and slows progress to a crawl. Firms are increasingly looking to Lean Construction to help them more consistently deliver projects on time and on budget. Tools have been scarce and typically automate or support only portions of the Lean methodology.
As important, they do not connect to the broader enterprise—reinforcing the division between the two fundamental construction project management approaches: Critical Path Method (CPM) and Lean Construction.Oracle Lean Scheduling Solution addresses both of these challenges with a single, complete cloud-based offering. It digitizes and simplifies Lean to optimize its impact. As important, it provides an environment in which Lean and CPM can coexist, complement each other, and deliver compounded benefits.
Oracle Lean Scheduling Solution is an integrated platform for CPM and Lean that empowers stakeholders to resolve lingering coordination, commitment, and community challenges and harness the combined power of Lean Construction and CPM. With the solution, construction and engineering enterprises can reduce the need for larger, complex master schedules that were never intended to micro-manage the level of detail required for field execution teams place the right coordination tool in the hands of the right stakeholder to eliminate costly re-work, improve accountability, and reduce risk. Drive performance down to the job site based on commitments of field disciplineso effectively blend Lean and CPM methodologies and realize the benefits of both, Oracle Lean Scheduling Solution provides a single, unified platformfor engineering and construction projects, programs,and enterprises. It automates processes and integrates project data from the back office, front office, and field to enable complete coordination and command of even the most complex construction projects. The solution unites scope, cost, and scheduling in a single platform, enabling unprecedented visibility from the sub-task level through the enterprise view. The solution delivers an integrated environment to effectively:»Define Work Breakdown Structure (WBS):
Easy to-use templates enable users to create a big-picture schedule by organizing projects into manageable phases using WBS »Map activities, durations, and relationships:Users map logical relationships between activities in the CPM network to determine critical path and project completion date. The solution automates activity sequencing and relationships and connects activities between WBS elements to reflect transitions between phases»Create activity plans:The digital planning board—purpose built to support Lean Construction—enables Last Planners to break down activities into smaller tasks, collaboratively plan due dates, and commit to them as planned »Make commitments:The planning board provides an automated environment for committing to due dates, tagging completed tasks, and recommitting to those not completed. It encompasses planned, committed, completed, and overdue tasks, as well as reference activities »Monitor Performance:Intuitive analytics enable users to monitor Planned Percent Complete (PPC) and assign reasons for missed commitments per Lean Construction Institute best practices. Task alerts also notify the CPM network in real-time of incompatible dates or status. This capability informs the WBS update process and improves collaboration and control throughout the project .
Oracle Flow Manufacturing backflushes all the components and performs resource and overhead transactions upon recording the assembly completion. Oracle Flow Manufacturing allows scrapping assemblies and returning from scrap at any operation using cither scheduled or unscheduled flow schedules. A scrap transaction will cause all the components through the scrap operation to be backfluslied .
Traditional batch production is controlled through work orders which, by Lean standards, includcloo much waste. Kanban-based flow manufactoring is conducted without work orders – and therefore without the waste associated with work orders. Flow manufacturing ischaxacterized by production lines and/or cells in which work is pulled or moves piece-by-piccc through the process and not in batches .This pull based work flow in the production line is generally achieved by using visual Kanban cards that can be lags, labels, containers, or electronic signals.
One of the available ERP systems offering support in Orderless Manufacturing is TTW's WinMan software It uses an empty container as a signal to trigger internal replenishment. These empty containers further indicate completion of a finished product and backflushing of the component material. In order to help complete the transaction, TTW has designed a set of internal Kanban cards which can be bar code scanned . Oracle Flow Manufacturing records completions of assemblies without having to create work orders (Oracle,, 2006),
As isevidcnl from the list of Lean-enabled features now being supported in ERP systems, a number of vendors have begun to enter the marketplace. It is provided a list of some of these vendors and their primary Lean-enabled software modules, Three of these vendors arc then explored in more detail Oracle is considered a leader in Lean-manufacturing implementation within its FRP system. According its research. Oracle had over 100 companies using its Flow Manufacturing module and as many as four times that amount used it.
Kanban software . Oracle Flow Manufacturing has been implemented as part of the Oracle E-Business Suite (Oracle, 2006). Oracle considers Flow Manufacturing as crucial to ilsc-commcrce strategy. Because of this, Flow Manufacturing has been promoted as effective in the reduction of product cycle times, inventories, and proccsscomplcxity. In addition, Oracle cl aims the software will simplify production, and help meet production demand at affordable prices.
§2. HEWLETT PACKARD (H.P.)
Hewlett-Packard is not a company one normally thinks of as pursuing a lean strategy. Indeed, as far as I can tell, lean terms are not ingrained as part of HP’s vocabulary.But HP is doing well, and at least one profile I’ve seen implies that some of that success involves lean principles – consciously or not.
A recent issue of Forbes declares HP to be “Tech’s New King,” noting that, for the first time, HP’s sales – $92 billion in 2006 – have passed those of IBM.
The story gives a lot of credit to CEO Mark Hurd, who assumed his job on April 1, 2005. After the mediocre performance under Carly Fiorina and the spying scandal that brought down chairman Patricia Dunn, Hurd has quietly cut costs, reorganized, and boosted sales, profits and the stock price.
How has he done it? Several of the methods mentioned in the story embody what a lean strategy is all about. For example:
An unrelenting desire to improve. “The day you feel like you’ve won, you need to drive out of the parking lot and not come back,” Hurd is quoted as saying.
Dedication to measuring performance. The story describes how Hurd questioned top executives about their divisions. One was Steven Nigro, a senior vice president. 'If you can't explain this better than I can,' he told Nigro at one point, 'come back in two months and tell me then what's going on.' When they met again as planned, Hurd recalled every number Nigro had told him, without resorting to notes. News of such meetings flooded management, and the message was clear: You must understand how the revenue moves through your business and how your business fits into HP. That’s also an example of policy deployment and aligning goals (hoshin kanri). Adopting a lean organizational structure based on products. Hurd found that HP’s most powerful executives controlled only 30 percent of their budgets. Marketing and selling were run by the Customer Solutions Group (CSG), set up by Fiorina to get rid of autonomous product-line fiefs. She succeeded in reducing the number of brands, but the structure blocked direct feedback from the sales force to product designers. Hurd eliminated CSG and handed budget control over to product division heads. The result: 'Now I have 80% control of my P&L. Sales, marketing and supply are all under my control,' says Ann Livermore, who runs the servers, software and services division. Todd Bradley, head of HP's PC division, adds: 'It's a no-place-to-hide model. Accountability is a big part of the strategy.'Hurd is still dealing with the aftermath of the spying scandal, and much remains to be done. But it sounds as if he understands, perhaps implicitly, what lean is all about.
While being big certainly has its advantages, it is more effective today to be fast, innovative, and flexible. Consequently, there is a need to redefine organizational growth or success. Successful organizations are coming to be described as those with the ability to adapt creatively to challenges. In such enlightened companies, growth is characterized more by organizational evolution than by simple multiplication. The success of lean companies such as Toyota, Hewlett-Packard, and Motorola is founded on their ability to renew themselves again and again as they skillfully face the changes that inevitably come their way.
Lean production is revolutionary because it upsets the normal relationships between price, quantity1, quality, and profit. Traditional managers believe that the means for gaining profit can be expressed in the formula:
The formula assumes that the quantity of products sold and the price and cost to produce them ate the three areas where management may control, or at least attempt to control, profit. The ma [or profit strategy in mass production was based on economies of scale, a principle that allowed companies to lower costs as they increased the production quantity. In the grossest terms, mass production meant cheap, standardized imitations of craft production Hems. Economies of scale enabled mass producers to charge low prices because the more they produced, the cheaper goods became. But as anyone might tell you, a Model T is not a Kolis Roycc. With the advent of lean production, the rules have changed. According to the logic of mass production, the better the quality the higher the price. Lean production systems produce high quality goods at costs that are not proportionately high. Taiichi Ohno and Shigeo Shingo, cocieatnrs of the Toyota production system, first implemented the waste-eliminating methods which demonstrated that high quality does not necessarily demand high cost. The huge success of the Toyota company and of many other companies that adopted Toyota methods bears testament to their principles. The Toyota production method was in fact the precursor to lean production.
A lean production system can reduce overall costs—especially indirect costs—while maintaining quality standards and reducing manufacturing cycle time. A lean company can make twice as much product of twice the quality in half the time and space, at half the cost—with a fraction of the normal work-in-process inventory.
David Packard and William Hewlett, founders of the Hewlett-Packard Corporation, passed away in 1996 and 2001. respectively. “[Ojbituary writers noted their enduring legacy was not the multi-billion dollar tech giant—it was the HP Way.” So said the Palo Alio Weekly in "The Rise and Fall of the HP Way.”ls The original “Way,” set down in print by the founders in 1957, is in the company’s web site. Its seven elements do not look like the stuff of a legendary business culture. Executives in many other companies have announced similar-sounding intentions. Some of the words refer to profit, growth, success, and listening to customers. Others were in the vein of, "W'e trust our employees." “Everyone has something to contribute," and so on. Apparently. though. Hewlett and Packard, and successive management teams, put their weight behind the ponderous words.
In my own working relationships with several HP business units in the 1980s. when people talked about the HP Way I detected no hints of cynicism. And in most companies cynicism abounds (which may explain why Dilbert cartoons, initiated in 1989. are still going strong). HP people seemed to treat the Way as something only insiders could really understand. When pressed for an explanation. HP’ers would usually talk about openness, trust, honesty, concern, and respect for the employee. The “Rise and Fall" includes comments of former HP’ers about these things. They talk about “how co-workers were reassigned to new' jobs rather than sacked: how the company for a time implemented a shortened work week for all employees so certain individuals would not lose their jobs": also about how Hew lett and Packard would refuse “short-term contracts, so they would not have to lay off chunks of their work force after the contract was over. Packard said they didn't want to run a 'hire-and-lirc operation.’ ”
In my JIT/lean roles at the HP sites. I had, at first, no more than passing interest in the HP Way. That changed. The main lean effort was to convert from functional departments and "autonomous build" to cellular assembly w ith cross-trained, job-rotating cell teams and kanban parts movements. New responsibilities of assembly operatives were for line balancing, material handling, quality, ownership :ind upkeep of* their own facilities, Iran king hourly performance against the rate, collecting data on everything that gt>es wrong, and team problem analysis acid correction. To take on these responsibilities they would need to work closely with engineers, buyers, maintenance, payroll, hiring/ training, cost analysts, and oilier experts. It sounds like a daunting challenge that might lake years to suchieve. But these HP planls had the HP- Way advantage. Uulike ulmost any other company in the 1980s. in HP plains or desks were often out on production floors intermixed with fabrication, assembly, and testing. Engineers and managers already had habits of taking coffee and eating company-famished pastries and apples will be the assemblers and equipment operators. The way was greased for working together on successful lean conversion, which at HP usually talk weeks* not years,
In most large companies, a lean conversion would he slowed by corporate red tape and complex decision processes. At HP, with its Way-derived policies of high autonomy at each plant. That autonomy could be seen in plant size find staffing policies. When success with Ms product line pushed a plant's population up to about 200 employees, it would split a mocha-like into two plants.
Regarding stalling. HP favored decentralized expertise in design engineering, purchasing, and accounting. Eli other multi-plant companies, these would be mostly centralized at ctnpomle headquarters. HP’s sizc-iimitcd plants were trusted largely to run themselves with family-like familiarity, Thai environment is conducive to working together rather than lighting the functional and factional battles common in very large facilities.
Plant-level autonomy might be thought to hinder knowledge transfer. But openness, another way clement, prevailed. The company’s first major cellular-lean implementation (in which J was not involved Hook place in 1982 in an I IP printer plant in Vancouver, Washington. Soon thereafter, people in other company plants had learned all about it and pul their minds to doing it themselves.
Some strong company cultures (c.g.. that of Nordstrom) are largely indifferent to conventional lean practices. The H P Way, however, turned out to he a welcome mat for cellular lean, along with total quality and supplier partnerships. My impression is that the thoroughness, speed, and ease of implementing IIT/lean at several of HP's plants in the 1980s may exceed that of any other company since that time. Those implementations have received their share of published recognition,
Alas, as claimed in the Forbes Weekly, HP may have, to some extent, lost its Way. Some say that apparently began when an outsider, hard-charging Catty Fiorina from Lucent, became CFO, At one point, Fiorina got 80.009 employees voluntarily to go on a shortened work week. She followed that by cutting the work force by 6,000, "leaving some employees feeling they'd fallen fora 'bail-und-switch.’' " Further, Fiorina championed the merger with Compaq, which was publicly and bitterly opposed by William I lew let t, then still living. Merger with another large company could not help but water down the HP Way. fin financial and other respects, however, the merger seems to have turned out well.)
Recent events suggest that the HP Way may he under more stress. The new chief information officer. Randy Mott, bad worked IT magfa earlier in his career at Will-Mart Lint! then Dell. He was hired at HP to do the same thing: Consolidate vast numbers of different information systems and data warehouses so that HP marketers, financial managers and others would be able to see the whole. That sounds like good medicine, except that large measures of autonomy are lost in the process.’1 In retrospect, ii is a wonder that the Way lasied so long, given die volatility of the electronics industry along with the many years of rapid growth of HP. Time will tell whether HP has regressed to the point of adopting (lie common but often-discredited make-your-ntnobers business-management system .
§3.ACCENTURE
KPN (Royill KPN N.Vr in full) is a Dutch landime and mobile telecommunications company, headquartered in The Hague. According to ks annual report of 2012, KPN has a revenue of €12,708 billion and 26,156 employees (FTEs), and its market share of Dutch mobile service is approximately 45%.
Accenture is a global management consulting, technology services and outsourcing company, wirh approximately 275,000 people serving clients ill more than 120 countries.
The company generated net revenues of US $28.6 billion for the fiscal year ended Aug. 31, 2013. The Dutch branch of Accenture has two offices in Amsterdam and Almere and employs about 2300 people. Accenture delivers its sendees and solutions through various focused industry groups in five operating groups: Communications & High Tech, Financial Services, Products, Resources and Public Service & Health.
KPN is important to Accenture in the Netherlands because it is a showcase client of the Communications &C High Tech operating group. From the perspective of KPN, Accenture supports its backbone business processes. Accenture is responsible for about 25% of the application landscape of KPN.
The partnership between KPN and Accenture started in April 2011 with a multimillion euro contract for business support systems and operations. The duration of this contract is five years. With this contract, Accenture provides KPN with outsourcing services through its teams in the Netherlands, Bratislava, and India. Accenture can be regarded as the main orchestrator of the partnership on a daily basis. Currently this partnership is heading towards a very positive direction with a common goal of establishing an effective, long-term relationship. The desire to achieve this goal is reflected by the gradually growing size of the existing contract and a new four-year technology and management consulting contract to develop, build and maintain a full range of digital managed services since January 2013.
There are multiple contracts between KPN and Accenture, The outsourcing structure between the two companies consists of six major areas: Consumer Market, Business Market, Multi play Services, Business Intelligence, Operations Support System (OSS) and Business Support System (BSS), For this case study, we focused on the BSS1, The PSS supports the KPN contact center agents in their sales processes and provides functions such as billing and fulfillment. Wc decided to focus on BSS for two reasons, First, the BSS is directly impacted by the dynamic market environment, since sales processes have a direct connection with KPNs end-customers. Investigating whether the Lean principles about voice of the (end-) customer, systems thinking and flow have been used in die cooperation of KPN and Accenture on this system is easier to study than for other organizational areas. Second, compared to the other organizational areas, BSS has fewer idiosyncrasies within the telecommunications industry. Generally speaking, a sales process of a telecommunications company is similar to those in other iindustries and therefore, the findings depend less on the telecommunication industry. This allows us to more easily compare findings from this case study with those from other case studies as a result of the current multi-client study on Lean partnering.
This case study describes the situation at the time of interviewing and writing, which is the partnership between KPN and Accenture up to October 2013. Ac this moment, the partnership is half way of the five years coutracr. Based on rheir successful experience of cooperation during the last two and a half years, both organizations would like to get the efficiency of the partnership ro a higher level, Accenture is one of the Lean management consulting providers, while KPN has been practicing Lean since 2004. Both organizations aim to take their Lean im piemen tat ion efforts on a partnership level to a higher level, and this case study investigates whether their collaboration in the partnership can also be considered Lean and what factors impact the Leanness of the partnership.
Within KPN, the NecCo division is a network company where most of the technical infrastructure and IT of Dutch telecommunications reside. NetCo includes several departments with a dear functional split of development and operations. But both development and operation departments have the same partners, including Accenture, and the same joint concepts. In this case study* each interview involves two interviewees. One of them comes from a development department and the other comes from an operation department at the same organizational level. Consequently, we were able to observe whether and how Lean principles are used both in development and operation departments. Accenture maintains the BSS with basic ITIL processes, such as change management* and also more elaborated ones like capacity management, database management and security management. The maintenance part of the BSS outsourcing contract involves several teams fro m Accenture: a small team in the Netherlands, a medium-sized team in Bratislava, and a large team in India. Accenture also has a large team working on development projects on both BSS and Consumer Market, Eighty percent of the developers work in Accenture’s India Delivery Center (IDC) in Bangalore.
Accenture Academy offers proven, cost-effective learning solutions for a more versatile workforce and a more agile organization. We provide a flexible learning approach that helps your people be more versatile and your entire organization be more agile in the marketplace. Curriculum includes Supply Chain Management, Finance, Procurement, Analytics, Leadership & Management and Specialty Skills. Representative companies from the top 10 lean manufacturing companies identified in 2014 by Manufacturing Global achieved significant improvements using lean principles. For example, a chip manufacturer reduced its lead time from 14 weeks to 10 days to introduce a new chip into its factory. The US manufacturer had modeled its production system after Toyota’s production system.
In a recent presentation on LeanLeadership, Jim Womack(2008)said that every organization must address the3Ps:purpose, processes and people. He believes that most organizations struggle because the purpose is not clearly defined, the processes are not clearly specified and
the people are not fully engaged. In his view these are the responsibility of the leaders and managers of Lean organizations. Jim Womack believes that one of the problems is that traditional organisations have a vertical focus, and managers think vertically to optimize their area, department or function. Lean managers, on the other hand, think horizontally, in the direction that value flows through the organization. However, this does not imply that functions are less strong in Lean organisations. In many cases, including Toyota, they are
even stronger. Lean organisations create strong horizontal focus by assigning a responsible person to manage product flow at the same time as they create strong functions that focus on knowledge capture and career paths.
Manufacturing operations are complex, especially within extended supply chains, and hidden costs and inefficiencies (otherwise known as waste) are difficult to identify and eliminate.
Successful companies employ best-in-class practices—lean manufacturing principles—that are applied to optimize processes, such as product design and quality, materials management, and production line layout, and also provide methodologies for continuous improvement to achieve efficiencies and customer service levels that allow companies to successfully compete in today’s marketplace.
The methodologies and practices behind High Performance are long-established in the private sector, as demonstrated by the success of companies such as Procter & Gamble (P&G), Apple, Colgate, and Intel. Some of these ideas and practices are gaining a foothold in the public sector.
In recent years, our colleagues at the Accenture Institute for Health and Public Service Value have studied dozens of public sector organizations around the world to identify the strategic and operational principles for creating public value. Combining their research with our long experience in helping private sector businesses create shareholder value and our more recent work in the public sector has led us to identify three essential ingredients for creating a High Performance public sector organization:
Being outcome-focused and citizen-centric. An organization can be considered high-performing if it delivers the right outcomes and only the right outcomes to the public. That means allocating customers budget to delivering programs that truly reflect the priorities of your customers, whether another government agency or citizens. Meeting this standard is a constant battle for many public administrators as they attempt to balance the needs of a diverse constituency. The “right outcomes" for a public urban transport system. Tor example, require a finely tuned portfolio of travel options that includes buses, trains, airports, light rail, highways, bike paths, and pedestrian sidewalks.The portfolio must also reflect the geography and preferences of the taxpayers who reside there so that it supports the economic, social, and cultural life of the city.
Focusing on the distinctive capabilities needed to deliver on the mission. Ever)' organization performs a wide range of tasks, some crucial to meeting short-term or long-term customer needs (the “distinct capabilities" required to deliver on the mission) and some needed simply to keep the organization running. High-performance government organizations are unshakeable in their efforts to develop specific capabilities that support the services or products they deliver and at the same lime to minimize their effort in everything else (including the option to outsource non-distinctive work). For example. the U.S. Defense Logistics Agency (DLA). as its name implies, is responsible for getting equipment and supplies to the U.S. armed
forces wherever they are needed, anywhere in the world. The agency manages more than 4 million consumable items ami processes more than 30 million transactions worldwide. The most important use of DLA resources would be building its expertise in "supply chain optimization’' since that is its distinctive capability—the thing that is most critical to being able to successfully fulfill iis mission.
Building a Performance anatomy for your organization. The term “anatomy" is used to represent the structure of an organization, A Performance anatomy gives an organization the elements it needs to deliver outcomes exceptionally well—with the highest quality and productivity levels—and to be responsive to shifts in the publics needs. A Performance anatomy for the National Institutes of Health, for example, would have to include die capabilities to rapidly and effectively review proposals anti award grants and to provide for world-cliass oversight of diverse research projects. To construct a Performance ana to my, public sector leaders must be willing to adopt methodologies that will maximize targeted outcomes within their budget limitations.
In summary; to achieve the highest level of performance, government organizations must determine and clarify which outcomes they want to achieve, and what it is they will iln and will not do to achieve those outcomes. Then, they have to deliver (he most services possible for taxpayer dollars, and they have to do it with an effectiveness and efficiency that is on par with the best companies in the world.
CONLUSION/RECOMMENDATIONS
Operational aspects of lean thinking and their link to performance have been looked at more thoroughly, but application has been limited. The same goes for cumulative capabilities, where research is scarce. More attention is needed to verify these key propositions of lean thinking .
The key concept in lean thinking is ‘value’. Value is defined as the capability to deliver exactly the (customized) product or service a customer wants with minimal time between the moment the customer asks for that product or service and the actual delivery at an appropriate price. By defining ‘what customers want’, process-steps can be divided in value-adding and non-value adding. Value adding activities contribute directly to creating a product or service a customer wants. Non-value adding activities do not and are called waste. Of course, waste needs to be removed or avoided.
Even if these problems are addressed and lean delivers on its promises, the challenges to increasing the role of lean thinking are daunting. They require no less than the redesign of the system as we now see it. Perseverance, high quality leadership, dedicated professionals and patience are surely needed. Scepticism and resistance will be high, success not guaranteed. Organizations may think twice before embracing on such a journey, or worse, superficially implement lean thinking, adding to existing resistance and making it more difficult to improve in the long term.Overall, we support the possibilities lean thinking offers to improve the work in a corporation .Lean is a hands-on improvement method, in line with suggestions made by leading authors on how to improve the conditions for human resources and their results worldwide . Yet, if lean thinking over the next decades will be hailed as the ‘machine that changed the globalized world’, more rigorous and balanced research and reporting is needed.
While it is beyond the scope of this paper to discuss the methodological aspects of the evaluation of lean thinking, it is important to note that lean thinking is composed of a number of components, which act both independently and interdependently. Research on such complex interventions requires special methods and research designs . Currently, case study designs are the most frequently used. While this design can provide useful insights, it has serious limitations regarding generalizability and inter-subjectivity. Along with the other methodological issues surrounding the evaluation of lean thinking, which we mentioned in the introduction, it is safe to say that not only more research, but also higher quality research is needed. At this time, to state that ‘the lean message is 100% positive’ seems a bit of a stretch.
Research has also highlighted other factors that are influencing the move towards systems managing the total marketing operation.
From a workload point of view BTL marketing creates significant demands on the department. Instead of completing say one advert in a national paper BTL may require five individual adverts in specific interest magazines supported by five tailored mailshots that will be different to reflect the particular interests of the prospective customers. Although the budgets for BTL have grown, very few companies have budgeted for increases in staff (based on responses to PIPC survey), or for the significant extra costs which BTL will incur (eg print runs for different brochures will be smaller so printing costs will rise). So many departments struggle to find ways to absorb the work and costs. It is an accepted truth that Below The Line marketing (BTL) delivering personalized messages directed at specific sectors of the market is the most effective way to communicate with the required audience. Budget research by the Winterberry group shows that BTL spending is increasing by an average of 7.8 per cent each year. This is borne out by the PIPC survey in which the largest single reason for increases in budget was reported to be BTL marketingLegislation across Europe and the USA requires that marketing manages regulatory compliance across all the collateral they produce. For example, this may be a Financial Services Authority requirement that interest rates are shown according to a pre-defined formula, requirements from the Food Standards Agency that the presence of GM ingredients is clearly listed or the Sarbanes–Oxley requirements that marketing processes are transparent and appropriately documented. In these instances it is no longer sufficient to rely upon the repro-house or agency as the main guardian of compliance. What is needed is a total approach to marketing whereby procedures within the department guarantee and audit compliance. In several surveys this is reported as a major concern for CMOs, particularly those that must rely on clerical procedures to enforce the compliance.
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