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THIS IS LEAN

Niklas Modig
Stockholm School of Economics

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@niklas_modig  
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What is lean?
•  Way of working •  Production system
•  Philosophy •  Strategy
•  Approach to improvement •  Eliminating waste
•  Approach •  System for understanding
•  Systems thinking •  Mind-set
•  Culture •  Values
•  Quality system •  Management system
•  Way of life •  Tool box
•  Method

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Fruit

High level
of abstraction

Pear Apple

Whole Piece Low level Green Red


of abstraction

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Three central choices

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Alison thinks she has cancer

Local  doctor’s   Mammography   Breast  clinic   Cytology   Breast  clinic  


surgery   &  ultrasound    

WaiCng   WaiCng   WaiCng   WaiCng  

42  days  
First   Diagnosis  
contact  

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Sarah feels a lump in her breast

One  stop  breast  clinic  

First  
Diagnos  
Diagnosis  
contact  

2h  

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Any difference?

42  days  24h  =1008h   2h  

500  $mes  
faster  
WHY?  
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Two different views on efficiency

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RESOURCE EFFICIENCY à FOCUS: RESOURCE

Local doctor’s Mammography Breast clinic Cytology Breast clinic


surgery & ultrasound

Waiting Waiting Waiting Waiting

42 days
First Diagnosis
contact

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RESOURCE EFFICIENCY à FOCUS: RESOURCE

Filming the “source”

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FLOW EFFICIENCY à FOCUS: FLOW UNIT

Local doctor’s Mammography Breast clinic Cytology Breast clinic


surgery & ultrasound

Waiting Waiting Waiting Waiting

42 days
First Diagnosis
contact

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FLOW EFFICIENCY à FOCUS: FLOW UNIT

Filming the “receiver”

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Two different strategies

Resource  efficiency   Flow  efficiency  


Focus   Resources  /  funcCons   Customer  /  unit  
Goal   High  capacity  uClizaCon   Fulfil  needs  
OrganizaCon   Parts  /  ”Islands”   System  /  ”Ocean”  
Competence   Specialists  /  “depth”   MulC-­‐competence  /  “Width”  

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What shall we prioritize first?
RESOURCE EFFICIENCY FLOW EFFICIENCY

LONG THROUGH-PUT TIME SHORT THROUGH-PUT TIME

HIGH WASTE   LOW


CAPACITY CAPACITY
UTILIZATION UTILIZATION

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Resource  
efficiency  

Flow    
efficiency  
WHY?  

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Maximize Maximize Maximize Maximize Maximize
capacity capacity capacity capacity capacity
utilization utilization utilization utilization utilization

Local doctor’s Mammography Breast clinic Cytology Breast clinic


surgery & ultrasound

Waiting Waiting Waiting Waiting

42 days
First What happens when “a system” is busy? Diagnosis
contact à  A diagnose will take long time
à  We have to handle many patients at the same time
à  We have to restart the diagnose many times

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THE OPTIMAL PROCESS

Resource
Flow efficiency
efficiency
100%
Free 100%
Free 100%
Free 100%
Free
utilization
capacity utilization
capacity utilization
capacity utilization
capacity

1 2 3 4

What happens when “a system” is busy?


à  Things will take long time
à  We have to handle many things at the same time
à  We have to restart the value adding process many times

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Different indirect effects
Resource  efficiency   Flow  efficiency  
Focus   Resources  /  funcCons   Customer  /  unit  
Goal   High  capacity  uClizaCon   Fulfil  needs  
OrganizaCon   Parts  /  ”Islands”   System  /  ”Ocean”  
Competence   Specialists  /  “depth”   MulC-­‐competence  /  “Width”  

Resource  efficiency   Flow  efficiency  


Through-­‐put  Cme   Long   Short  
Number  of  units   Many   Few  
Restarts   Many   Few  

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Resource efficiency drives ”system waste”
NegaCve  result  
Resource  efficiency  
Resource  efficiency  
Focus   Resources  /  funcCons  
Focus   Resources  /  funcCons  
Goal   High  capacity  uClizaCon   à  UnsaCsfied  customers  
Goal   High  capacity  uClizaCon   à  UnsaCsfied  personnel  
OrganizaCon   Parts  /  ”Islands”  
OrganizaCon   Parts  /  ”Islands”   à  Waste  
Competence   Specialists  /  “depth”  

Resource  efficiency   Failure  demand  


Through-­‐put  Cme   Long   Forget,  frustraCon,  rework,  search…  
Number  of  units   Many   Difficult  to  handle,  Under-­‐capacity...  
Restarts   Many   Quality  problems,  no  system  responsib…    

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Three sources of inefficiency
Secondary
need

Secondary
need
Long Secondary Secondary
throughput need need
time
Secondary
Secondary need
need Secondary
need

Over-focus on
resource
Secondary
need efficiency
Secondary
Many need
Many
restarts flow units

Secondary
need Secondary
Secondary
need
need

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The efficiency paradox
By NOT focusing on maximizing capacity utilization, MORE capacity will be available

Superfluous  work  
Total     (Secondary  need)  
capacity  
(100%)  
 

Value-­‐added     Value-­‐added    
work   work  
(Primary  need)   (Primary  need)  

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The efficiency matrix

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The efficiency matrix

High  
Resource  efficiency  
Low  

Low   High  
Flow  efficiency  

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The efficiency matrix

High  

Strategy  to  increase  resource  efficiency  


Resource  efficiency  
Low  

Low   High  
Flow  efficiency  

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The efficiency matrix

High  
Resource  efficiency  
Low  

Strategy  to  increase  flow  efficiency  

Low   High  
Flow  efficiency  

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This is lean = an operations strategy

High  
Resource  efficiency  
Low  

Low   High  
Flow  efficiency  

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Resource  
efficiency  

Flow  
efficiency  

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How to do the “how”?

High  
Resource  efficiency  
Low  

Current   How?   Future  


state   state  

Low   High  
Flow  efficiency  

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?  
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Just-in-time and Jidoka
Perfect understanding of:
•  The process / the system 89:30  
•  + / - 5   SCORE   1  
•  Progress

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Welcome to
Stockholm School of Economics!

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How  can  we  develop  operaCons  where  everyone  “sees”  
everything  and  has  perfect  progress  control  all  the  Cme?  

ONE  CLICK  AWAY  à  ONE  LOOK  AWAY  


 
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Monitor  the    
Resource   outcome  from    
efficiency   “my  island”  

Monitor  the    
Flow  
progress  of  the    
efficiency  
system  

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When is an organisation lean?

High  
Resource  efficiency  
Low  

Low   High  
Flow  efficiency  

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+

time
1 2

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+

How?

time
1 2

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PROACTION ACTION REACTION

0 1 2 3 4 5 6

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PROACTION ACTION REACTION

NORMAL FLOW

1 2 3 4 5

0 6

1. SET

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PROACTION ACTION REACTION

NORMAL FLOW

1 2 3 4 5

0 1 2 3 4 5 6

1. SET 2. TEST

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PROACTION ACTION REACTION

NORMAL FLOW

1 2 3 4 5

0 1 2 3 4 5 6

1. SET 2. TEST 3. EVALUATE

A B

DEVIATION DEVIATION

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PROACTION ACTION REACTION

NORMAL FLOW

1 2 3 4 5 + DEVIATION

0 1 2 3 4 5 6 X NORMAL OUTCOME

1. SET 2. TEST 3. EVALUATE X


DEVIATION

-
A B

DEVIATION DEVIATION

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PROACTION ACTION REACTION

NORMAL FLOW

1 2 3 4 5 + DEVIATION
WHY?

0 1 2 3 4 5 6 X NORMAL OUTCOME

1. SET 2. TEST 3. EVALUATE X


4. ANALYZE DEVIATION

- WHY?

A B

DEVIATION DEVIATION
WHY? WHY?

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PROACTION ACTION REACTION

NORMAL FLOW

1 2 3 4 5 + DEVIATION
WHY?
AHA!
X

0 1 2 3 4 5 6 X NORMAL OUTCOME

1. SET 2. TEST 3. EVALUATE X


4. ANALYZE DEVIATION

-
5. LEARN WHY?
AHA!

A B

DEVIATION DEVIATION
WHY? WHY?
AHA! AHA!

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PROACTION ACTION REACTION

NORMAL FLOW

1 2 3 4 5 + DEVIATION
WHY?
AHA!
X

0 1 2 3 4 5 6 X NORMAL OUTCOME

1. SET 2. TEST 3. EVALUATE X


4. ANALYZE DEVIATION

-
5. LEARN WHY?
6. IMPROVE AHA!

A B

DEVIATION DEVIATION
WHY? WHY?
AHA! AHA!
CHANGE

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PROACTION ACTION REACTION

NORMAL FLOW

1 2 3 4 5 + DEVIATION
WHY?
AHA!
X

0 1 2 3 4 5 6 X NORMAL OUTCOME

1. SET 2. TEST 3. EVALUATE X


4. ANALYZE DEVIATION

-
5. LEARN WHY?
6. IMPROVE AHA!

A B

DEVIATION DEVIATION
WHY? WHY?
AHA! AHA!
CHANGE

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THE
LEARNING
LOOP

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The learning Dynamiskt
organisation
mål
(kontinuerlig förbättring)
Flow   efficiency  
Flödeseffektivitet
(%)

A  Dynamiskt
dynamic  mål
state  
“con$nuous   evolu$on”  
(utvecklas hela tiden)

Utgångspunkt
Current   state  

Time  
Tid

Utgångspunkt
Current   state  
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Monitor  the    
Resource   outcome  from     ReacCve  
efficiency   “my  island”   execuCon  

Monitor  the     ProacCve    


Flow  
progress  of  the     learning  
efficiency  
system  

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THANK YOU!

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