What is meant by Lean?

Lean focuses on identifying, reducing, and eventually eliminating wasteful and non-value added activities within an organization.  By applying lean principles, an organization is able to increase its through-put, reduce waste and costs, and improve its profitability while at the same time increasing its customer satisfaction and improving its own employees’ satisfaction.  Waste is anything that is not absolutely necessary to add value to the product or service being offered.

Lean strives to create systems and processes utilizing the least amount of resources including people, equipment, material and inventories, budget, and facilities.  The success of lean is highly dependent on its principles being understood by all employees and those employees being involved in its applications.

One of the main focuses of lean is to eliminate waste in all phases of operation.  There are seven categories of waste:

• Overproduction
• Waiting
• Transportation
• Over processing
• Inventory
• Motion
• Producing rejects

Let’s look at each of these seven categories of waste.

The waste of overproduction is producing more than is needed or producing faster than is needed.  Some examples of waste of overproduction would include:

• Manufacturing- shift changes in one hour.  Rather than start machine tooling changeover, you keep running until end of shift
• Healthcare—ordering tests not needed
• Printing---you could print 5000 copies for$750 or you could print 10,000 copies for $1000.  You print the 10,000, use only 6000 and end up storing and throwing out 4000 copies—why not print 6000?
• Office management- keeping both paper and electronic copies of documents

The waste of waiting exists when idle time is created when people wait for machines, people wait for people, or machines wait for people.  Some examples of waste of waiting would include:

• Produce something and next person in line is not ready for it
• Government- waiting for a decision to be made so actions can begin
• Real estate—have a selling agreement for a property and then have to wait to transfer title until all paperwork is completed
• Bottlenecks- areas in a process that slow down the entire process
• Waiting for a signature/phone call
• In health care
  • Patients sitting in reception room or emergency department waiting to see physician
  • Waiting for tests that have been scheduled
  • Waiting for results of those tests to be sent to physician
  • Radiology waiting for film to be read

The waste of transportation happens anytime goods or paper work are moved, the are handled more than once, there are delays in moving materials, or there is any unnecessary moving or handling of goods or paper.  Examples of waste of transportation are:

• Centralized staff meetings—people move from work site to meeting site
• Walking to another area in building to make copies, mail materials, get office supplies
• Moving supplies in and out of storage
• Moving paperwork from one signer to another
• In health care
  • Retrieving of medical records
  • Delivering pharmaceuticals from Pharmacy Department
  • Moving patient to Radiology, Physical Therapy, CAT scan, etc.

The waste of over-processing develops from efforts that add no value to the product or service from the customer’s viewpoint.  Examples

• An employee double and triple checks his work
• Paying by check rather than electronically transferring funds or using debit card
• Multiple copies of paper work having to be filed
• Multiple signatures needed to process purchases, issues checks, etc.
  • The hiring process when you have to
  • Advertise position
  • Process resumes and application forms
  • Schedule interviews
  • Conduct testing and drug testing
  • Process actual hiring of person
• In government—filling out multiple forms all asking similar information

The waste of inventory occurs any time you have any supply on inventory on hand in excess of customer requirements necessary to produce goods or services just-in-time.  It also occurs when you have more materials, parts, products, supplies on hand than are needed right now.  Some examples of waste of inventory:

• Warehouses and storage cabinets—having any items in stock for more than a month
• Printer toners and paper—having an excess amount on hand

 The waste of motion exists any time you have any movement of people that does not add value.   Some examples of waste of motion are:

• People looking for parts/tools/supplies
• People looking for files/paperwork
• People going to a meeting, not having something needed, and having to go back to office to get it
• People going to a room down the hall to retrieve printouts from their computer
• People walking to another room or building to process documents

The waste of producing defects occurs in work that contains errors, needs rework, has mistakes, or lacks something necessary.   Examples of waste of producing rejects include:

• Producing something that needs rework or is scrapped
• Writing a proposal and having to make numerous corrections
• Producing an Incorrect invoice to a customer
• Checks which are written for incorrect amounts
• Wrong supplies being ordered

 The other aspect of lean is when you separate the value added activities from the non-value added activities.  Value added activities are those activities that physically change the work to meet customer requirements or a specific request for which the customer is willing to pay.  All other steps are considered non-value added.

Another way to look at non-valued added activities is to ask “Will the customer pay for it?”  If the item was on an invoice, would the customer pay for it?  If the answer is yes, it is valued added.  If the answer is no, it is considered non-value added.

Some examples of non-value added activities would include:

• Processing of sales invoices
• Ordering of training materials
• Storing of materials
• Having staff meetings to discuss a product or service
• Print and assemble work books for training class

While these activities may be very necessary to provide a product or service, many organizations will automate these and other non-value added activities.