All entries for Thursday 24 January 2013

January 24, 2013

The Six Lean Goals

Came across an interesting article on The Six Lean Goals. URL:

Goal 1: Define Demand for Services

Quite simply, this means defining the desire of purchasers, consumers, internal customers, and so on, for services. Services must be consistently delivered per customer expectations in order to ensure business success. When defining demand it is important to understand the multiple dimensions of customer expectations. Does the service meet specific "content" requirements (the ability to repair a computer)? Can the service be delivered when and where the customer desires (in my office; within the next sixty minutes)? Does the customer’s experience with the service providermeet expectations (courteous, active listener, thorough, professional appearance)?

Ultimately, the nature of demand – what is demanded, how much, how frequently, by whom,, where, when, and so on – guides decisions on how demand will be met and what the supply chainmust look like to deliver to demand. Without a deep understanding of these dimensions an organization will find it quite difficult to creating a lean enterprise.

Goal 2: Extend Demand Lead Time

In the service environment, statistics are used to characterize and forecast demand. The best statistic is one that reflects a known demand and ample time to respond to int. Organizations must build into their efforts the sensing and forecasting mechanism that give them the earliest possible lead time, companies give themselves flexibility to combine and schedule their resources to match supply to demand.

Goal 3: Match Supply to Demand

The third goal of a lean enterprise is to match the supply of its service offerings to the demands of an ever-changing marketplace. It is essential that a company continuously assess its ability to meet existing and emerging customer expectations (as described in Goal 1) and use demand input to design how it will make resources available in response to demand. In the perfect lean organization, demand and supply are matched exactly.

In the service environment, organizations constrain supply by how they set their operational hours and make the necessary resources available. Without access to an affordable and infinite supply of resource, at any time and any place, customers have learned to wait, learned to do it themselves, or simply lived without the desired service. Bottom line: A lean enterprise must focus on matching supply to demand to increase customer satisfaction and to gain competitive advantage in the marketplace.

Goal 4: Eliminate Waste

Waste is defined as any activity that doesn’t create value for the organization or its customers. Much ado has need made about internal services that are essential business capabilities being classifiedby tradition “lean” definitions as non-value-adding and, thus, a waste. For example, it makes business sense that a company needs processes to recruit, hire and develop its people. How could these processes beclassified as non-value-adding? The industry has responded by developing multiple “good business sense” definitions of value.

Value Adding (Value Creating)

In traditional lean applications, a value adding activity directly affects service offerings. This definition has been expanded to encompass all the value-creating activities of a business such as all transactions that support order fulfillmentactivities and business activities that deliver vital resource capabilities which in turn enable the service delivery.

Non-Value-Adding (Value Destroying)

A non-value-adding activity does not add value to the offerings or an essential business capability. Waste such as waiting extra processing, and defects are example of non-value-adding activities.

Goal 5: Reduce Supply Lead Time

Supply lead time is the total time it takes to complete a series of tasks within a process or combination of processes in order to deliver a service in response to a customer demand. Lead time consist of task cycle times and periods of waiting, which are classified as batch delays. Examples of lead time include the period between the receipts of a sales order and when the customer’s payment is received, the time it takes to request maintenance support to the completion of the work order, and, on an enterprise level, the time it takes to introduce new services after they are first designed.

By reducing supply lead time, a lean enterprise improves its ability to match supply to demand, respond to changes in customer demand, increase capacity to handle multiple demands more efficiently, improve planning and scheduling flexibility, and improve response time to unplanned events.

For some organizations this goal drives their entire lean initiative as it is believed that supply lean time reduction, by design, drives resource efficiency.

Goal 6: Reduce Total Costs

In economic terms a lean enterprise is one that strives for an absolute advantage in the marketplace. The absolute advantage is a concept of trade in which an entity delivers services more efficiently, using fewer labor and/or capital resources than its competition.
Any investments inexcess resources such as people, materials, and equipment, or in inefficient processes are considered wastes. Conversely, not applying enough of the right types and amount of resources to meet service demands would also be a waste. By investingin lean principles and methods, an organization eliminates the costs of wasteful activities.

Reference: The Lean Enterprise Memory Jogger for Service by Richard L. Macinnes

PIUSS: Basic Comparision Between Lean and Six Sigma – Concepts

A primary distinction between Lean and Six Sigma is with regards to their basic perception. Lean aims for continuous process improvement by encouraging and guiding the workforce to reduce waste within their domain. It is an ongoing practice, and needs to be embraced by all the personnel in all parts of the organization. In contrast, Six Sigma is a logical and practical method that focuses on reducing defects in a specific business, or operations. The outcome pertains to that particular area, instead of encompassing the entire organization. Six Sigma specialists, such as Black Belts and Master Black Belts lead the improvement process.

PIUSS: Basic Comparision Between Lean and Six Sigma – Methodology

Lean instantly understands the activity and requirement of the process. If an activity adds value, it is later improved by a finer flow of process and subsequently improvement of manufacturing. Six Sigma focuses on particularly eliminating variations in the process output. Lean believes that any process which does not add value represents waste in the process and should be eliminated by decomposing the processes to their minimum levels. On the other hand, Six Sigma does not consider the value added aspect, and believes that defects in the process or output are waste. This could be regarded as a significant difference between Lean and Six Sigma. Lean is a persistent approach, with the perception that improvements are attainable irrespective of the fluctuations in the technology, environment, etc.

PIUSS: Lean and Six Sigma Comparison

Lean is a beneficial initiative to understand, which reduces the tasks that are detrimental in adding value. The foremost objective is to restructure the manufacturing process in an effort to enhance quality. Six Sigma is essentially related to the management of change by facilitating perfection and improving the business processes. The emphasis remains on improving the quality by reducing the defects to 3.4 per million opportunities.

A basic difference between Lean and Six Sigma is primarily that Lean is regarded as a business philosophy, whereas Six Sigma is a process improvement programme. Lean endeavours to disseminate a change in the organizational behaviour and values, and focuses on recognising and reducing waste. However, on the contrary, Six Sigma is an applicable and practicable process improvement programme, which does not fundamentally instigate to change the managerial/organizational traditions, or a perpetual behavioural change amongst the employees.

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