January 24, 2013

The Six Lean Goals

Came across an interesting article on The Six Lean Goals. URL: http://iso-qms.blogspot.in/2012/07/six-lean-goals.html

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

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