Lean Production and Quality Management Overview

Lean production

Lean synchronization means moving towards the elimination of all waste to develop an operation that is faster, more dependable, produces higher quality products and services, and, above all, operates at low cost.

Lean synchronization

Lean synchronization focuses on ensuring that supply matches demand as closely as possible, with minimal waste and maximum efficiency (with minimal steps).

4 principals of lean

Waste elimination: continuously identify and remove anything that doesn't add value to the customer.

Mura

Means 'lack of consistency' or unevenness that results in periodic overloading of staff or equipment.

Muri

Means absurd or unreasonable. It is based on the idea that unnecessary or unreasonable requirements put on a process will result in poor outcomes.

Muda

Activities in a process that are wasteful because they do not add value to the operation or the customer.

Over production

Making more than what is required by the customer (i.e., too much supply compared to demand).

Waiting time

Any delays between one process step and the next.

Transport

Movement of work between departments that does not add value.

Over-Processing

Adding more value to a service/product that the customer is not willing to pay for.

Inventory

More materials/information on hand than is required.

Motion

Needless movement of people (specifically workers).

Waste

Any aspect of the product/service that does not conform to customer needs.

Value stream mapping

'Value stream' mapping focuses on value-adding activities and distinguishes between value-adding and non-value-adding activities.

5 S's

Sort (Seri) - eliminate all unnecessary items i.e., all things that are not required for current work.

Process Mapping

Involves physically mapping a process, then above it mapping the information flow that enables the process to occur.

Future State Map

Problems are diagnosed and changes suggested, making a future state map that represents the improved process, operation or supply chain.

Visual Management

One of the lean techniques designed to make the current and planned state of the operation or process transparent to everyone.

Benefits of Visual Management

Demonstrates methods for safe and effective working practice; communicates to everyone how performance is being judged; assesses at a glance the current status of the operation.

Standardization

The process of establishing and applying consistent methods, procedures, designs, or specifications across products, services, or operational activities to ensure uniformity, efficiency, and quality.

Stabilization of Work Conditions

Allows for easier judgment regarding 'normal' versus 'abnormal' situations.

Safety Improvement

Increases the level of safety.

Cost Reduction

Enables cost reduction - faster with less variation and less defects.

Operating Time Stabilization

Stabilizes operating time (cycle time).

Quality Maintenance

Helps maintain and improve quality.

Criticism of Lean

One size fits all solutions; top down rather than bottom up problem solving.

Total Quality Management (TQM)

CI approach that puts quality at the heart of everything that is done by an operation.

Business Process Reengineering (BPR)

Radical approach to improvement that attempts to redesign operations along customer-focused processes rather than on the traditional functional basis.

Lean

CI approach that emphasizes the smooth flow of items synchronized to demand achieved through a complete elimination of waste.

Six Sigma

Disciplined methodology of improving every product, process, and transaction, aiming for virtually zero defects.

Six Sigma Definition

The name Six Sigma comes from the idea that a process's natural variation (±3 standard deviations) should fit within half the specification range—equating to a ±6 sigma range for minimal defects.

Lean Sigma

The combination of six sigma and lean concepts, including waste reduction and data-driven rigor.

Importance of Design

90% of businesses growing rapidly say design is significant to them, only 26% of static companies say the same.

Cost Reduction through Design

Design reduces costs by making processes more efficient.

Time to Market

Design can also reduce the time to market for new products and services.

New Product Development

Almost 70 per cent of companies seeing design as integral have developed new products and services in the last three years.

Design

The process of creating solutions to meet specific needs. It's about planning, structuring, and shaping ideas into practical and functional outcomes.

Innovation

The process of introducing something new or significantly improving something that already exists. It's about turning ideas into value—whether that's for businesses, customers, or society.

NPD

New Product Development, where design creates innovation.

4Ps of Innovation

A framework that includes Product, Process, Position, and Paradigm innovations.

Product Innovation

Innovations in goods or services that a company provides, including entirely new products or significant improvements to existing ones.

Process Innovation

Changes in the way a product or service is produced or delivered, often leading to increased efficiency, reduced cost, or higher quality.

Position Innovation

Changing the context, target market, or message of a product, essentially repositioning it in the eyes of consumers.

Paradigm Innovation

The most radical form of innovation that involves changing the underlying mental models or business logic, potentially disrupting industries or creating new ones.

Aesthetics

The visual and sensory appeal of a product, including material, colour, shape, size, and proportion.

Functionality

How well a product performs its intended task.

Usability

How intuitive, accessible, and efficient a product is to use, including learnability, efficiency, and error tolerance.

Idea Generation

Involves brainstorming user research, market trends, and internal feedback.

Idea Screening

Evaluating and selecting the most promising idea before investing time or money into them.

Conception Development and Testing

The selected idea is developed into a more concrete concept, often involving prototyping and feature specification.

Final Stages (Launch)

The product moves towards production and market launch.

Stage Gate Model

A process that includes stages such as discovery, feasibility, acceptability, and vulnerability assessments.

Discovery Stage

Involves analysis of customer needs, suggestions from stakeholders, and ideas from R&D.

Feasibility

Assessment of whether the necessary skills, organizational capacity, and financial resources are available.

Acceptability

Evaluation of customer demand, financial return, and satisfaction of performance criteria.

Vulnerability

Assessment of the risks involved and potential consequences of the project.

Technology Push

An approach driven by new technology.

Market Pull

An approach driven by market demand.

Open Innovation

Involving various stakeholders in the design process.

Supply Chain Management (SCM)

Management of the flow of goods and services, including all processes that transform raw materials into final products.

Levels of Operations Analysis

Operations can be analyzed at the level of the supply network, the operation, and the process.

Importance of SCM

Up to 75% of expenditure is spent on managing the supply chain; it is the dominant function within modern organizations.

Supply Chain

A network of connected and interdependent organizations mutually and co-operatively working together to control, manage and improve the flow of materials and information from suppliers to end users.

Outsourcing

The process of transferring an existing business activity, including relevant assets to 3rd parties.

Determinants of outsourcing decision

Factors that influence whether a firm should outsource, including dependency on capacity and knowledge.

Dependency on capacity

A situation where a firm has the knowledge and skills but not the capacity to perform a business activity.

Dependency on knowledge

A situation where a firm does not have the knowledge or skills to perform a business activity.

Example of Toyota's Outsourcing

Engines: 100% in house - knowledge, capacity; Transmissions: Designed in house, outsourced - knowledge, no capacity; Electronics systems: 100% outsourced - no knowledge, no capacity.

Outsourcing Pros

Focus on core, reduces costs, enables more flexibility, increased ability to match market demands, provisional benefits of economics of scale, access to best in class skills, provision of fresh ideas and objective creativity.

Outsourcing Cons

Failure to identify core and non-core may lead to outsourcing core, difficulty in insourcing later, lack of skills to maintain outsourcing activities, increased costs in relationship management, lacks of skills and understanding to design appropriate service level agreements with outsourcing company.

Sector effects of Outsourcing Pros

Provides niche opportunities to enter a sector, improvements of products and services from the sector, improved ROI, policies can be redirected to focus on service.

Sector effects of Outsourcing Cons

Privatization by stealth, reduction of government control over sector, creation of powerful outsourcing companies, impact on employment, conflict with stakeholders.

National effects of Outsourcing Pros

Worldwide best in class capabilities, improved national focus services on citizens and taxpayers, improved GNP and employment.

National effects of Outsourcing Cons

National employment problems, downward pressure on domestic salaries, mismatch of international cultures, risk of foreign control on key sectors and resources, international exploitation.

Purchase vs Procurement

Purchase = actually buying; Procurement = includes different types of acquisition such as purchase, rental, associate work, selecting suppliers, negotiation, agreeing on terms.

Right Quality

Get the product or service that meets the required specifications and standards, fit for the intended purpose.

Right Quantity

Procure the correct amount — not too much or too little, to avoid excess inventory and shortages.

Right Time

Receive the goods or services when they are needed to avoid production stoppages or delays.

Right Place

Ensure that the delivery location is correct for the materials or services needed.

Right Price

Pay a fair and competitive price, balancing cost with quality and other factors.

Reshoring

Bringing back operations from outsourced destinations to produce near the customer markets.

Triple A

Agility, Adaptability, and Alignment in supply chain management.

Agility

The ability to respond to short-term changes in demand or supply quickly and handle external disruptions smoothly.

Adaptability

The ability to adjust supply chain design to meet structural shifts in markets.

Alignment

Creating incentives for better performance and sharing risks, costs, and gains of improvement initiatives.

4 Rs

Responsiveness, Reliability, Resilience, Relationships in supply chain management.

Responsiveness

The ability to meet customer demands by responding to changes in the market.

Reliability

The quality of being reliable, dependable, or trustworthy.

Resilience

The ability to cope with unexpected disturbances.

Relationships

The ability to manage relationships, as every business is built on relationships.