LEAN ENTERPRISE

Achieving what is known as a lean enterprise requires a change in attitudes, procedures, processes, and systems. It is necessary to “zoom out” and look at the flow of information, knowledge, and material throughout the organization.

In any organization there are multiple paths through which products, documents, and ideas flow. The process of applying lean thinking to such a path can be divided into the following steps:

1. Produce a value stream map (VSM).
This is also referred to as a value chain diagram. This diagram is described in detail by Rother and Shook (1999). It has boxes labeled with each step in the process. Information about timing and inventory is provided near each process box.

2. Analyze all inventory notations with an eye toward reduction or elimination.

Inventory tends to increase costs because:
• Storage space may be expensive (rubber awaiting use in a tire factory is stored at 120°F; wood inventory may need to have humidity control).
• Quality may deteriorate (rust, spoilage, and so on)
• Design changes may be delayed as they work their way through the inventory.
• Money invested in inventory could be used more productively elsewhere.
• Quality problems that are not detected until a later stage in the process will be more expensive to correct if an inventory of defective products has accumulated.

One company refers to its racks of safety stock as the “wall of shame.”

3. Analyze the entire value stream for unneeded steps.
These steps are called non-value-added activities.

4. Determine how the flow is driven.
Strive to move toward value streams in which production decisions are based on the pull of customer demand. In a process where pull-based flow has reached perfection, a customer order for an item would trigger the production of all the component parts for that item. These components would arrive, be assembled, and delivered in a time interval that would satisfy the customer. In many situations this ideal has not been reached and the customer order will be filled from finished goods inventory. The order will, however, trigger activities back through the value chain that produce a replacement part in finished goods inventory before it is needed by a customer.

5. Extend the value stream map upstream into suppliers’ plants.
New challenges occur regarding compatibility of communication systems. The flow of information, material, knowledge, and money are all potential targets for lean improvements.

If you’re just starting out, here are the books to look at first. Click each entry to preview details, see ratings by other customers and more.
Lean Production Simplified: A Plain-Language Guide to the World’s Most Powerful Production System, Second Edition
Pascal Dennis
Lean Strategies for Product Development: Achieving Breakthrough Performance in Bringing Products to Market
Clifford Fiore