The Value of Lean Thinking Presented by: Brian D Krichbaum Process Coaching Incorporated

Process Coaching Incorporated Page 1 of 46 © 2008 Process Coaching Incorporated What is Lean Thinking? A systematic approachto identifying and through continuous improvement by flowing the service or productat the pull in pursuit of perfection. eliminating waste of customers

Process Coaching Incorporated Page 2 of 46 © 2008 Process Coaching Incorporated History of Lean Manufacturing 1798 Eli Whitney develops interchangeable parts Toyota Motor Company established 1908 through 1913 Henry Ford develops the moving assembly line. 1920’s Sakichi Toyoda develops mistake proofing and 5 Whys August 4, 1937 First supermarket in the United States opened June – August 1950 Deming introduces lean quality principles to Japanese engineers and managers 1950’s - Taiichi Ohno develops the Toyota Production System (TPS)

Process Coaching Incorporated Page 3 of 46 © 2008 Process Coaching Incorporated House of Lean

Process Coaching Incorporated Page 4 of 46 © 2008 Process Coaching Incorporated Benefits of Lean Production  Reduction in overhead / operating costs  Productivity Increase (30% - 40%)  Throughput Time Decrease (70% +)  Increase Profit  Customer Lead Time Reductions (50% +)  Work in Process Inventory reductions (70%+)  On Time Delivery to customers (95% +)  Quality Performance Improvements

Process Coaching Incorporated Page 5 of 46 © 2008 Process Coaching Incorporated The Eight Deadly Wastes  Overproduction  Waiting  Transportation (Moving)  Non-Value Added Processing  Excess Inventory  Defects  Excess Motion  Underutilized Resources

Process Coaching Incorporated Page 6 of 46 © 2008 Process Coaching Incorporated Value Added Activity What is value added activity?  Tasks that customers recognize as valuable  Tasks that are done right the first time  Tasks that transform the product or service 5% Value Added 95% Non- Value Added

Process Coaching Incorporated Page 7 of 46 © 2008 Process Coaching Incorporated Lean Manufacturing Principles 1  Specify Value  Identify the Value Stream  Make value creating steps flow  Let the customer pull product  Strive towards Perfection 1 James Womack, Lean Thinking, (Simon & Schuster, 1996), p

Process Coaching Incorporated Page 8 of 46 © 2008 Process Coaching Incorporated Lean Manufacturing Principles  Correctly specifying value is critical in lean thinking  Providing the wrong good or service the correct way is still waste  Value must be defined in terms of specific products at specific prices at specific times  Only the ultimate customer can define value – but they often don’t know how to do it! Specify Value

Process Coaching Incorporated Page 9 of 46 © 2008 Process Coaching Incorporated  Customers and producers must challenge old value definitions and work together to define what is needed – not just a better widget  Look at the “whole” product – not just the features, but how it is used – to determine it’s requirements  Define the Target Cost (the cost of producing the product waste free) Lean Manufacturing Principles Specify Value

Process Coaching Incorporated Page 10 of 46 © 2008 Process Coaching Incorporated  When the steps for producing a product aren’t identified, they can’t be challenged  The purpose of value stream mapping is to identify waste  We map the current state and the future (lean) state  All value streams have internal (our plant) and external (our plant + suppliers + customers) components Lean Manufacturing Principles Identify the Value Stream