Lean Management

Introduction

Module - 1

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Program Objectives
To present

Lean Management philosophy

“Lean Thinking” as a proven strategy for managing plants
and factories.

Underlying principles

Various Lean tools and practices

To Learn in detail the tool of Value Stream Mapping

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Ultimate Goal of an
Organization
Making Profits

Survival

Growth

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Rate of Improvement Matters

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Rate of Improvement Matters

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Ultimate Goal of an
Organization

Profits = Revenue - Cost

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Who wants what….

$ Cash !!

Value !!
CUSTOMER YOUR COMPANY
Low Cost Profit
High Quality Repeat Business
Availability Growth

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Ultimate Goal of an
Organization

Revenue depends on ability to provide a

Customer preferable product
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Ultimate Goal of an
Organization Preferable
Quality

Preferable Preferable Ability to

Price Product customize

Availability

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Organizational Challenge
The challenge is to make
• what the customer wants,
• when the customer wants it,
• at a price the customer is willing to pay.

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Organizational Challenge 1

CRAFT MANUFACTURING - Late 1800’s

Car built by workers who walked around the car
Built by craftsmen with pride
Components hand-crafted, hand-fitted
Excellent quality
Very expensive
Few produced

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Organizational Challenge 2

Starting about 1910, Ford and his right-hand-

man, Charles E. Sorensen, fashioned the
first comprehensive Manufacturing
Strategy.
They took all the elements of a manufacturing
system-- people, machines, tooling, and
products-- and arranged them in a continuous
system for manufacturing the Model T
automobile.

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Organizational Challenge 3

Ford is considered by many to be the first practitioner of

Just In Time and Lean Manufacturing.

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Organizational Challenge 4

Assembly line - Henry Ford

Low skilled labor, simplistic jobs, no pride in work

Interchangeable parts
Affordably priced for the average family
Millions produced - identical

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Customer Expectation 5

• Much better quality

• More customized variants
• Just-in-time delivery
• Shorter lead times
• And freedom to order in small quantities

…..At Lower & Lower Prices

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Industry Trends 6

Customer Expects
100% Enterprise
Industry

Delivery
Quality

Customers’ expect 100% Customer Expectations

Quality

Time Time
Industry

Industry

Price
Cost

Customer Expects
Customer Expects

Time Time

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Cost Vs. Selling Price 7

Profit
Cost
DON’T WAIT...
NOW IS THE TIME
Selling Price
Loss

Time
How to survive?

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How to Survive?
• During 1970s, Japanese were redefining the
manufacturing paradigms.
• Began to incorporate quality
• into cost focused strategy
• Discovered the power of FLOW
• Use of TIME as a new competitive dimension
Toyota Production System was born

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What if Flow is not proper? 9
• Traffic jam
• Trains/ flight not on time
• Blood pressure
• Heart attack
• Flood/ draught
• High Inventory
• High lead time
• Increased cost
What else…

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Taiichi Ohno … 0

All we are doing is looking at the time line from the

moment the customer gives us an order to the point when
we collect the cash.
And we are reducing
that time line by
removing the non-value
added wastes.
Taiichi Ohno, 1988

Customer Product
Order Waste Shipment

Long “T”

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Toyota Management 1

Cells or flexible assembly lines

Broader jobs, highly skilled workers, proud of product
Low lead time
Excellent quality mandatory
Costs being decreased through process improvement.
Global markets and competition

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Lean Management 2

• During 1980s Americans realized that the things

are not the same anymore.
• Japanese were not only making better cars,
they were also doing it cheaply.
• Toyota was making cars in America at 25% less
cost.
• Severely denting American market share.

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Lean Management Philosophy 3

An outcome of study of Toyota Production Systems, by a team of

researchers in USA, led by James Womack & Daniel Jones.
Their books detailing how Toyota has emerged, as the world’s
most efficient automaker popularized Lean Manufacturing as a
new manufacturing philosophy.
The first book was published in 1990 as
“The Machine That Changed the World”

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Lean Management 4

Popularized by another book in 1996.

“Lean Thinking - Banish Waste

and Create Wealth
in Your Corporation”.

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Jim Womack’s Comments

“We also know that lean thinking is spreading

across the world.
This summer, when Dan Jones, Jose Ferro, and I
visited India for the first Lean Summits, we were
amazed to find some of the leanest operating
practices we have ever encountered outside of
Toyota City.”

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In Order to Survive… 6

We have to make our Organizations Lean by

understanding the Lean philosophy and
promoting Lean Thinking throughout the
organization .

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Lean 7

As defined by Webster Dictionary :- Adj

1. Containing little or no fat

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Definition of “Lean”
The term “lean” is used because lean
manufacturing uses “less”…
 Labor in the factory Term “lean” coined by
 Manufacturing space John Krafcik,
one of the research members
on Jim Womack’s MIT team
 Capital investment
 Materials for the 5 year study.
 Time between the customer order and the product shipment

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Lean Management: Purpose
The purpose of Lean Management is to make your
company strong and fast.

• Strong = High performance, repeatable performance

• Fast = Easily adapts to fluctuations in market conditions

Reduced operating costs and improved customer

satisfaction are natural by-products of being Lean

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Lean Management: Philosophy
A management philosophy that demands shorter lead
times to deliver high quality, low cost products
through improved flow in the value stream.

Design (concept to customer)

Supply (order to delivery)
Build (raw material to finished Product)

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Lean Management 1

Improved Decreased
=
Flow Cost

Decreased New Business

Cost =
Sustainable Profits

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Lean Management: System 2

An integrated system to ensure

• Value for the customer
• Improvement in flow in
• Product development,
• process engineering,
• operations management &
• corporate governance processes

• Respect for people

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The Three Objectives
CUSTOMER PROCESS WORKER

Machine Machine
1 2

Machine Machine
4 3

Highest Total elimination of Respect for

satisfaction muda or waste human dignity
of needs

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