Lean Glossary of Terms

Lean Glossary of Terms Deloitte has launched a dedicated effort to equip practitioners with Lean and Six Sigma capabilities as part of a robust, structured approach to continuous business improvement. This document provides a glossary of key Lean terms that each practitioner should be familiar with. Lean focuses on a relentless effort to systematically reduce waste while improving the flow of value to the customer. Lean involves a set of tools and principles for managing and improving work that focuses on simplifying processes and making performance visible. Many of these principles are discussed in the following pages. If you have any questions or suggestions on how to improve this glossary, please contact David Linich, dlinich@deloitte.com.

Error proofing (Poka Yoke) Key Lean Terms Andon A tool of visual management, originating from the Japanese for "Lamp“. Andon usually refers to lights placed on machines or on production lines to indicate operation status as outlined below: Green: All operations are normal Yellow: A machine is in the middle of a changeover or planned maintenance Red: Operations are abnormal; e.g. a machine down Additionally, staff on machine lines can pull what is known as an Andon cord upon noticing a defect. This will shut down the entire line until the defect is corrected Cell Design Cell design is used to improve a process through the analysis of both the physical layout and the process configuration; i.e. the specific process steps and sequence. Consider the following for good cell design: Layout Design: The physical configuration of the work cell should best suit the operation Material Flow: How the product, parts, and components move to, from, and within the cell should optimize efficiency Equipment and Tools: Equipment and tool design should be “fit for purpose” to ensure that work is conducted efficiently Task Design: How each task is performed should be reviewed to ensure worker safety Error proofing (Poka Yoke) Poka-yoke is a term used to describe any technique used to reduce the likelihood of error through a unique design characteristic which prevents improper assembly. These techniques are best applied to prevent the recurrence of an error following its initial identification. Poka-yoke designs include the following: Warnings: Provide quick feedback for potential problems Shutdowns: Cause the process to be interrupted when a particular control or process is bypassed or missed Auto-corrections: Provide integrated feedback that corrects the process before a given step is passed

Key Lean Terms (cont’d) Five S’s The 5 S’s is a five-step process to achieve and maintain a clean and well organized workplace. The five steps are: Sort (Organize): Clearly distinguish needed items from unnecessary items and eliminate the latter Store (Order): Keep needed items in the correct place for easy use Shine (Clean): Keep the workplace clean Standardize (Control): Make all of the above known and built into accepted standards Sustain (Discipline): Make 5 S’s part of daily operations Flow Flow is a Lean concept that maximizes value by producing only what is desired in the shortest time possible with the least resources. Key concepts used to implement flow include the following: Single piece flow Physically and visually linked operations Consolidated operations Simplified and standardized processes Just in time Just-in-time (JIT) is a manufacturing concept that emphasizes the optimization of all resources in the enterprise. It focuses on the elimination of non-value added activities (waste) to achieve optimum profitability by making specific materials available in the exact amount needed at a specific time. JIT is a pull system where the product is pulled along to its finish by defined customer need, rather than the conventional mass production which is a push system. It is made possible through various tools like kanban, andon, and cell design Kaizen Kaizen is a philosophy of continuous improvement which focuses attention on ongoing improvement that involves everyone. Its domain is that of small improvements from ongoing efforts. Over time these small improvements can produce changes every bit as dramatic as the “big project” approach Kanban Kanban is a visual tool that signals the need for replenishment of a resource at a particular part of a process. Typically, cards are used to indicate the number of parts or units that need to be produced to replenish those used downstream in the process

Key Lean Terms (cont’d) Kano Analysis Kano analysis is a quality measurement tool used to classify and prioritize customer requirements dependent on their impact to customer satisfaction. Three categories of requirements exist: Dissatisfier/Basic Expectations: Define customer’s minimal expectations. Doing them well does not guarantee success, but doing them poorly will put you out of business Satisfier/Performance Wants: Create rising satisfaction the more they are fulfilled, but also lead to increasing dissatisfaction the less they are fulfilled Delighter/Exciters: Provide features that go beyond customer’s expectations Lean Audit A lean audit is a tool used to evaluate the current use of Lean tools and techniques in an organization. It creates a baseline from which improvements and progress can be measured. The entire company should not be assessed at one time, rather the company should be broken down into manageable elements to be assessed individually. After assessing component or representative parts of the company, an overall assessment can be formulated by aggregating the component evaluations Level Scheduling (Heijunka Scheduling) Level scheduling is a tool used to generate a production schedule that is stable, smooth, and responsive to the market. The goal of level scheduling is to make the same quantity of an item every day Pull System A pull system is a production strategy that requires downstream processes to signal a need for replenishment before activity in each of the previous (upstream) processes is initiated. In the ideal pull system, production begins when the customer purchases the product and is only produced in the quantity required. The customer demand “pulls” the product through the process. No one tool exists to create a pull system. Instead, a shift in the way production is viewed often makes the greatest impact on creating a pull system

Key Lean Terms (cont’d) Seven Deadly Wastes Waste, or activities that do not provide value from the customer’s perspective, falls into the seven categories listed below: Excessive motion Defects Unnecessary hand offs Waiting time Unnecessary processing time Over-engineering Excessive resources Standard Work Standard work is a concept used to improve work efficiency and reduce variability by insuring that everyone follows the same procedure to complete a specific task. The procedure is improved as new ideas or technology become available Takt Time Takt time is the rate at which a completed product is finished. If you have a takt time of two minutes that means every two minutes a complete product is produced from a given process. Ideally, takt time should be matched to based upon customer demand to create an effective pull system Value Stream A value stream is all of the steps in a process, both value added and non-value added, that occur as part of delivering a product or service to a customer. Steps that don’t add value from the customer’s perspective should be removed to increase process efficiency Visual Controls Visual controls are a system of information displays, layouts, material storage and handling tools, and mistake proofing devices (poka yoke) which should be designed to fulfill the old fashioned adage of “A place for everything and everything in its place.” The visual control system makes product flow, operations standards, and schedules instantly identifiable to even the casual observer

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