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Relevant Criteria for Implementing the Lean Management Concept

Seminar Paper 2015 14 Pages

Business economics - General

Excerpt

Table of Content

Table of Figures

1. Introduction

2. Definition

3. Lean Management
3.1 Principles and methods of Lean Management
3.1.1 Value
3.1.2 The Value Stream
3.1.3 Flow
3.1.4 Pull
3.1.5 Perfection
3.2 Implementation barriers of Lean Management

4. Conclusion

Bibliography

Table of Figures

Figure 1: Toyota Production System House

Figure 2: Implementation barriers of Lean Management (Wyatt study)

1. Introduction

The initial situation of organizations is still shaped by rapidly changing environmental conditions. Unstable terms are caused by the globalisation, intensified market and competitive conditions, changing customer requirements and structures as well as new technologies and interconnected processes. Therefore, a lot of enterprises launched the Lean Management concept to optimize the efficiency of value-adding processes and the competitive position in times of change. Thereby, waste in form of, for instance, human activity which absorbs resources but creates no value such as mistakes that require rework or products that have not been sold and so tower up inventories influences the efficiency of the value chain negatively and, thus, should be avoided. The realization of a process and customer orientation while illustrating a lean structure and lean processes has become a challenge for every company (Womack & Jones, 2013).

The elaboration constitutes an overview of relevant criteria for implementing the Lean Management concept. At first, a definition clarifies the meaning of Lean Management whereby the main part illustrates lean principles and methods as well as implementation barriers which should be taken into consideration by implementing the Lean Management philosophy. Finally, a conclusion will summarize the findings.

2. Definition

For the further course of the work it is necessary to define the term “Lean Management”.

The origin of Lean Management can be found in the Japanese automotive industry. Within the scope of a study during the 1990s the scientists Womack, Jones and Roos (1997) explore the differences between Japanese, American and European automotive manufacturer and determined that Japanese producer used leaner structures as well as flatter hierarchies which affected the organizational development positively. The term “Lean Management” is a logical extension of the term “Lean Production” which emerged in the mentioned study and characterized the lean production system of Toyota (TPS). The methods of the concept occurred in the middle of the 20th century and leads to a high quality level and a stable process organization of Toyota (Bösenberg & Metzen, 1995, p. 8). Lean management indicates all principles, methods and procedures to structure the entire value-adding chain of production processes efficiently. The concept is a direction or philosophy of an organization. Responsibilities and communication channels should be designed logically whereby the most important aspects of the Lean Management concept are customer and quality focus as well as cost reduction. Furthermore, Lean Management organizes decentralized with commutated operating principles such as team work and thorough planning of activities. Organizations use tools like continuous flow of materials, Just-in-Time in manufacturing and logistics, Simultaneous Engineering in development and production planning, value stream mapping as well as Total Quality Management to implement the Lean Management concept. These emphases could affect internal and company comprehensive processes and structures. The concept focuses upon a further level: the human resources. The philosophy involves employees and suppliers in the process of downsizing to use existing competences (Bösenberg & Metzen, 1995, p. 8; Womack, et al., 1997).

3. Lean Management

Lean Management should create value without wasting processes (waste in Japanese: “muda”). The objective is to optimally coordinate all necessary activities relating to the value chain and prevent superfluous operations. On the basis of a holistic product system, Lean Management starts at the process level (Womack, et al., 1997).

3.1 Principles and methods of Lean Management

The five core principles of Womack and Jones (2013) illustrates the methodology of “Lean Thinking”, and form the recent foundation for implementing Lean Management activities and define guidelines for the inspection of the consisting system. Moreover, there are several analysis methods which illustrate complex context transparently to reveal inefficiencies and potentials. These practical technics or methods were also defined by the founder of the TPS, Ohno Taiichi (1993), whereof a few technics next to the five core principles will be explained in this chapter.

Abbildung in dieser Leseprobe nicht enthalten

Source: (Zollondz, 2013, p. 166)

Figure 1: Toyota Production System House

3.1.1 Value

The critical point where Lean Thinking starts is “value”. The producer should specify the value from the perspective of the customer which means that products are aligned exactly to the requirements of the customer. In this context, the customer should receive the product at the right time, in the right place as well as to a best possible quality and appropriate price. The foundation of the customer benefit is normally in a product which provides several functions and thus creates value (Schuh, 2013, p. 3). The decisive first step to think lean is to define the costumer value because the delivery of incorrect goods creates “muda” (Womack & Jones, 1997, p. 21). Management tools like, for instance, “Customer Relationship or Key Account Management” strengthen the customer orientation of an organisation and communication to customers (Kumar & Reinartz, 2012).

3.1.2 The Value Stream

The value stream determines all “specific activities required to design, order, and provide a specific product, from concept to launch, order to delivery, and raw materials into the hands of the customer” (Womack & Jones, 1996, p. 311). Thus, it distinguishes between a value stream in production to create a physical value, from delivery of raw materials up to a packaged finished product, and a value stream within the development process to create an immaterial value, from the product idea up to the product launch. The concentration on these value-enhancing processes prevents waste and supports the direction on customer needs. Therefore, it is necessary to reveal the value stream together with its participants to orientate the whole production system on the value stream. This leads to an optimal support and exploitation of resources (Womack & Jones, 1997, p. 21).

There are three types of activities in the value stream, but only one creates value. The first activity produces added value through, for instance, the assembly of doors at a vehicle. The second activity which is defined as “Type One Muda” creates no added value but seems to be unavoidable with current technologies or manufacturing capacities such as the inspection of welds to ensure the quality. The third activity is named “Type Two Muda” and can be directly eliminated (Womack & Jones, 1997, p. 22).

One method to analyse the value stream is the “value stream mapping” which illustrates a current state. Before the value stream is redrawn and useless processes are eliminated, it is essential to constitute all processes. This includes not only the value adding processes but the needless processes as well. While doing so, the processes of suppliers should be also considered beyond the company’s boundaries to include all improvement possibilities along the production flow. Through a better coordination between the collaborating companies, trust increases as well as control expenditure decreases which also demonstrates a form of waste. A faster and more flexible reaction on orders of customers can be realized and costs for unnecessary delays can be obviated. The main objectives are the reduction of lead times and the decrease of stocks (Schuh, 2013, p. 4; Womack & Jones, 1997, p. 22).

3.1.3 Flow

The centre of this principle is to bring the process steps in a continuous flow. One can speak from a flow if the processed goods pass through the value adding processes in a constant rhythm and provide a continuous and reliable stream of finished products without any damming, scrap or backflows (Womack & Jones, 2013). Thus, high stocks through, for instance, idle periods which are even a form of waste can be avoided. The inclusion of the flow principle can lead to an increase in productivity up to 50 per cent and to a sharp decline of failure rate.

Toyota refine the assembly line principle of Henry Ford according to new market conditions that required a big variant diversity in a short term. One key was, among other things, a systematically minimization of set-up times. Therefore, the aim in the production chain for an efficient production is a batch size of one piece each which is well-known as the “One-Piece-Flow”. If the challenge of small batch sizes is mastered, it creates an important condition to control the order-related manufacturing flexibly and efficiently. (Womack & Jones, 2013; Dickmann, 2009, p. 18).

Another principle to support the continuous flow is the “Just-in-Time” concept that involves the logistic and production part. It demonstrates a logistic-oriented and decentralized organization and control system in which the material is delivered and produced in the quantity and moment as it is required from customer orders (cp. Figure 1). This principle necessitates a matched production and material flow along the supply chain whereby a close cooperation with suppliers is indispensable. The less common Just-in-Time concept for production illustrates a paradigm change for many companies where the production is controlled by customer need and possesses a close connection to the One-Piece-Flow (from Push to Pull).

If the delivery is sorted in the sequence as they should be installed, one speaks from a “Just-in-Sequence” concept. For example, suppliers of automotive manufacturer load the truck with seats in the right sequence like they are directly needed in the production chain. Such purchasing concepts also lead to a reduction of stocks, time and costs. (Kummer, et al., 2009, p. 310; Dickmann, 2009, p. 18).

3.1.4 Pull

If the organization is customer-oriented and the value stream is aligned to the flow principle, the organization has to produce only if the customer orders or stocks reach a minimum. The organization orients its planning on customer demand and feeds streamlined batches into the production flow. This stands in contrast with pushing products through a production system which is unreceptively to the customer and results in, according to Ohno (1993), overproduction. In addition, it is a form of waste and leads to unnecessary inventory build-up which could be prevented through the Pull principle (Womack & Jones, 2013).

One method to put the Pull principle into action is the use of decentralized self-guidance control loops like the “Kanban” method as part of the Toyota production system. The aim is to control the replenishment and to reduce the local storage of intermediates. The complete material flow of an organization is organized like the storage of a supermarket. If the customer takes something out of the shelf with a certain amount of items, the gap is filled as fast as possible when stocks, for instance, fall below a reorder level. The tool of Kanban cards (often used with bar codes) serves as an information carrier for the original production control whereby the consumer is able to request a certain amount of items for post-production. For example, if a production stage consumed a certain item, the Kanban card instructs the previous production stage to post-produce this item.

That means that the withdrawals from several buffer stores and the subsequent deliveries in the same stores occur asynchronously along the value chain. Through the allocation of buffer stores along a multistage integration chain in production, an easy solution with simple tools of information and short ways of transport is found.

The advantage of the Kanban system is that, whenever there are unforeseen disruptions, it owns a principle of self-regulation which means that the production system could regulate itself automatically. This minimizes the control expenditure and increases the responsiveness of production (Kletti & Schumacher, 2014, p. 20; Womack & Jones, 2013).

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Details

Pages
14
Year
2015
ISBN (eBook)
9783656960034
ISBN (Book)
9783656960041
File size
484 KB
Language
English
Catalog Number
v299016
Institution / College
Prifysgol Cymru University of Wales
Grade
65 %
Tags
relevant criteria implementing lean management concept

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Title: Relevant Criteria for Implementing the Lean Management Concept