The Principles Of The Lean Business System

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    ProfessorPeterHines1Chairman,SAPartnersCoFounder&HonoraryProfessor,LeanEnterpriseResearchCentreatCardiffUniversity

    TheLeanPrinciplesThebookLeanThinkingbyJamesP.WomackandDanielT.Jones(1996)providedtheworldwithavisionofwhatLeanwasabout.Theauthorscommented:LeanThinkingcanbesummarizedinfiveprinciples:precisely specifyvalueby specificproduct, identify thevalue stream foreachproduct,makevalue flowwithout interruptions, let thecustomerpullvalue from theproducer,andpursueperfection(page10).Theydefinedeachoftheseprinciplesinmoredetailasfollows:Value: The critical startingpoint for Lean Thinking is value. Value canonlybedefinedby theultimatecustomer. And itsonlymeaningfulwhenexpressed intermsofaspecificproduct(agoodor a service, and often both at once)whichmeets the customers needs at a specific price at aspecifictime(page16)ValueStream:Thevaluestreamisthesetofallthespecificactionsrequiredtobringaspecificproduct (whether a good, a service, or, increasingly, a combination of the two) throughthe.problemsolving task from concept through detailed design and engineering to productionlaunch,theinformationmanagementtaskrunningfromordertakingthroughdetailedschedulingtodelivery,andthephysicaltransformationtaskproceedingfromrawmaterialstoafinishedproductin2thehandsofthecustomer(page19).Flow:Oncevaluehasbeenpreciselyspecified,thevaluestreamforaspecificproductfamilyfullymappedbytheLeanenterprise,andobviouslywastefulstepseliminated,itstimeforthenextstepinLeanThinking.maketheremaining,valuecreatingstepsflow(page21).Pull:Pullinsimplesttermsmeansthatnooneupstreamshouldproduceagoodorserviceuntilthecustomerdownstreamasksforit(page67).Perfection:Asorganisationsbegintoaccuratelyspecifyvalue, identifytheentirevaluestream,makethevaluecreatingstepsforspecificproducts flowcontinuously,and letcustomerspullvaluefromtheenterprise,somethingveryoddbeginstohappen.suddenlyperfection.doesntseemlikeacrazyidea(page25). 1Iamgratefulforthedebate,inputandassistanceofthefollowingtothiswhitepaper:colleaguesatSAPartnersespeciallyChrisButterworth,KevinEyre,GaryGriffithsandJillWhinfrey;membersoftheLeanBusinessSystemandotherspecificLeanBusinessSystemLinkedIngroupsthatIrunandparticipantsatthe2009LERCannualconference.

    THEPRINCIPLESOFTHELEANBUSINESSSYSTEM

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    RethinkingtheLeanPrinciplesSinceLeanThinkingwaspublishedin1996,ourunderstandingofwhatLeanishasmovedon3.Leanhasalsobeenappliedacrossawiderrangeofmanufacturingandserviceindustries4andtheissueofsustaining change has become more central5. As a result I believe it is now time to revisit theWomack&Jonesfiveprinciples. Inordertodothis, itwillbehelpfultounderstandwhatthemainareasofconcernsmightbe.Theseincludethefacts: Manyorganisationshavefailedtointerprettheoriginalprincipleswell Inhindsight,therearegapsorweaknessesintheoriginalset Theworldhasmovedon,and OurunderstandingofhowLeanworkshasimproved.These areas of concern lead to a number of specific problems (see Table 1). The first problemrevolves aroundhow Leanworks indifferent industries and the fact that classic Lean texts tend,explicitly or implicitly, to assume that we all work in high volume, repetitive manufacturingenvironmentssuchascarcomponentsorelectronicsindustries.There appears to be little allowance for people in low volume or more variable manufacturingindustriesortheservicesector.WhatwehaveobservedisthatthefurtheryoutakeLeanfromitscarmakingorigins,themorestrainedsomeoftheclassicprinciplesbecome.Forinstance,inhighvarietymanufacturingorserviceindustriesmanystrugglewiththeconceptofkanbanstylepullsystems.Asa result, organisations such as FlindersMedical, anAustralian hospital, have redefined their ownprinciples including: Focus on the Patient, Understand our Processes, Social & Technical Flows,ResponsiveTeams&LearnandSpread.

    Table1:ProblemswiththeOriginalLeanPrinciples 3See:PeterHinesetal,LearningtoEvolve:AReviewofContemporaryLeanThinking,InternationalJournalofOperations&ProductionManagement,24,10,pp.9941011,20044See:PeterHines,MustDoBetter:ApplyingLeaninthePublicSector,PublicSectorExecutive,Sept/Oct,pp.3445,20095See:PeterHines,PaulineFound,GaryGriffiths&RichardHarrison,StayingLean:Thriving,NotJustSurviving,LeanEnterpriseResearchCentre,Cardiff,2008

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    Thenextsetofproblems revolvesaround the fact that theoriginalprincipleshavebeengenerallyinterpretedatanoperational level. Many firmsuseLeanasa focus forpointkaizen improvementactivitieson theshop floor. Indeed,almostall theorganisationswemeet tend to lookatphysicalflowsonlyintheOrderFulfilmentprocess(customerordertodeliveryofproductorservice).AsaresultLean isoftenusedasashorttermcostcuttingorwastereductionmechanism. Indeed,manyrefertoLeanasacostreductiontoolkit,aninitiativeoraprogramme.EvenWomack&Jonesopen theirbookwith: Muda. Its theonewordof Japanese you reallymust knowmudameanswaste.IncontrastifyouseekouttheToyotacorporatewebsiteyouwillfindthatTaiichiOhnohasadifferentperspective:Eliminatemuda,mura,muri.completely6.WhatappearstobemissingintheLeanThinkingbookisthefocusonlevellingandmakinglifeeasyforpeople.Linkedtothiswastereductionfocus, isanothersignificantgap,the lackofanappropriatefocusonqualityandrisk.FundamentaltothecreationofacompleteLeanBusinessSystem7isachievingwhatthecustomerwants,whentheywantit.Thisimpliesthepursuitof100%qualityaswellas100%ontimedelivery.Italsoimpliesthatriskisatanabsoluteminimum.Rarelydowe see Lean appliedwithin the contextof thebusinessneeds,widerenvironmentalorsocialconcerns,strategyformationordeployment.Itisusuallyatacticalactivityrunbyfull,orparttime,improvementagents.Thislackofseniormanagementinvolvementmeansthatthereisrarelyappropriateseniorlevelleadershipand,asaresult,insufficientattentiontoemployeeengagement.Theresultofthisisthatthesustainabilityofchangeispoor.ThereasonforthisisthattheclassicLeanPrinciplesalmosttotallymissedtheimportanceofpeople.Specifically, little attention was drawn to the importance of communication, supportive humanresourcepolicies,stafftraininganddevelopment.Inaddition,inadequateattentionwaspaidtotheimportanceofresourcingthechangeprocessand individual jobdesign. It is interestingtocontrastthatwithsomekeyreasonswhyLeantransitionsfailasshowninTable2.

    Table2:ReasonsWhyLeanTransitionsFailSource:Lucey,Bateman&Hines,2005Finally,theclassicLeanprinciplesappear(orhavebeeninterpretedasbeing)toofocusedinsidetheorganisation. Asa result, feworganisationsoutsideof theautomotivesectorappear to take their

    6http://www.toyota.co.jp/en/vision/traditions/jul_aug_04.html7 FormoredetailsoftheLeanBusinessSystem,pleaseseethewhitepaperCreatingaLeanBusinessSystemathttp://www.sapartners.com/content/blogsection/6/87/lang,/

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    Leanactivities into their supply chain. The result isagainoftenpointkaizenactivitywhere singlefirmsarethefocusofimprovementratherthanthecompletesupplychain.To summarise: the traditional Leanapproach is toopiecemeal, too short term innatureandwithlittlefocusontheareasrequiredtomakeitsustainableinmostorganisations.Whatiscalledforisamoresystemicapproach.RedefiningtheLeanPrinciplesTakingalltheseconcernsandissuesintoaccountwehaveredefinedtheoriginalprinciplesintoanewholisticframeworkthe8PsoftheLeanBusinessSystem.Thisframeworkhelpscompaniesinanyindustry,andatanystageofLeanmaturity,toreflectonhowtheyaredeployingLeanintheirbusiness.Ithelpstotakethefocusawayfrompointkaizenactivitytowards a more contingent approach, a more aligned approach, a more human approach andultimately,amore sustainableapproach. Indeed it ispartofamove toLeanbecomingaculturaljourney towards everyone in theorganisation activelyworking towards a fully aligned tomorrowbetterthantodaysystem.

    Figure1:The8PsoftheLeanBusinessSystemWebelievethatthisnew8Psapproachwillalso,atleasttosomedegree,overcometheshortcomingoftheclassicWomack& Jonesapproachasshown inTable 3. In the table the darker the shading, themore impact the particular principle will have ontheexistingproblems.

    Table3:CounteringProblemswiththe8PsofLeanThinking

    PURPOSE

    PULL

    PROCESS

    PEOPLEPLANET

    PARTNERING

    PERFECTION

    PREVENTION

    The 8Psof Lean Thinking

    PURPOSE

    PULL

    PROCESS

    PEOPLEPLANET

    PARTNERING

    PERFECTION

    PREVENTION

    The 8Psof Lean Thinking

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    The8PrinciplesoftheLeanBusinessSystemadetailedlook1. Purpose Before starting any activity it is important to understand the purpose and to align the

    organisation.Askyourself,howmanypeopleinorganisations:

    Reallyunderstandwhattheyaresupposedtoachieve? FeeltheyhaveanappropriatesetofKPIs? Areworkingontoomanythingsatonce? Canpointtohowtheyaremakingtomorrowbetterthantoday?Sowhatdoyouneedtotakeintoaccountindevelopingapurpose?TraditionalmanagementhastaughtustofocusontheVoiceoftheOwner.TraditionalLeanThinkinghasextendingthattoincludetheVoiceoftheCustomer(althoughwerarelyfindthatthisisthestartingpointforaLeantransformation).Eventhisdualfocusisnotenough,asweseeinFigure2.Figure2:AchievinganEffectiveandSustainablePurposeFocuson theVoiceof theOwnerandVoiceof theCustomer fails to focuson themuri thefrustrationsandproblemsthatindividualpeoplefaceintheirwork.Itfailsthereforetoaddressthewhatsinitforme?objectiontochange.ItfailstofocusadequatelyontheVoiceoftheEmployee.ThisconcerniskeyandwewillreturntoitinthesectiononPeople.

    Asourcollectivethinkinghasmovedon,wenowneedtofocusalsoontheVoiceofSociety.

    Specificallyour roleascorporatecitizensand inparticular theenvironmental impactsofouractivities.WewillagainreturntothisareainthePlanetsectionbelow.

    Codifyingthepurposeisakeyjoboftheseniormanagementteam.Itisawayofcapturingthe

    WHAT, t