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Lean Management Systems
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Subject Code: S3W14

© Copyright 2019 Publisher
ISBN: 978-93-89633-16-0
This book may not be duplicated in any way without the express written consent of the
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and publisher have used their best efforts in preparing this book and believe that the
IT
content is reliable and correct to the best of their knowledge. The publisher makes no
representation or warranties with respect to the accuracy or completeness of the contents
of this book.
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MIT School of Distance Education, Pune
Academic Course Review Committee

Dr. Suresh Naik
Ex-Group Director,
Indian Space Research Organisation, Bengaluru
Dr. Vishal Talwar

Dean, School of Management,
BML Munjal University, Gurugram
Dr. Arvind Kulkarni

Ex-Director, MIT School of Management, Pune
IT Reviewer’s Name
Mr. Milind Khirwadkar
Managing Director, Solvop Solutions Pvt. Ltd.
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Prof. Jamal A Farooquie
Department of Business Administration, AMU, Aligarh
PhD in Management
Masters in Industrial & Production Engineering
Graduation in Mechanical Engineering
Printed: 2019
This book is a distance education module comprising a collection of learning material for our
students. All rights reserved.
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Course Objective and Learning Outcome
The course “Lean Management Systems” helps you to understand multiple concepts of lean.
Lean includes a diverse range of concepts, tools and techniques that can be used by organisations
to operate efficiently and effectively. Lean implementation also helps in achieving the ideal state
of zero wastes.
After studying this subject, you should be able to:

Explain the meaning and principles of lean
Discuss the important lean techniques
Examine the contributions made by various organisations and individuals to the field of
lean
Outline the concept of lean management
Describe the house of lean management
Describe the foundation stones of Lean Management System
Explain the differences among lean production, mass production and craft production
Explain the differences between traditional operations and lean operations
Discuss various lean management concepts such as waste, Kaizen, the 5Ms and Point of

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Use Storage (POUS)
Explain the importance and benefits of using lean management tools
Describe important lean tools such as Kanban, Value Stream Mapping, Automation and
Total Productive Maintenance (TPM)
Describe the concept and causes of waste in lean
Examine waste measurement techniques
Describe the various ways to eliminate waste
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Explain the concept, importance, characteristics and types of change and organisational
change
Discuss the five elements of Kaizen
Explain the use of Kaizen for problem solving
Explain the concept of Kaikaku and its ten commandments
Describe the Five Whys technique
Explain the differences among Kaikaku, Kaizen and Kakushin
Describe the concept of Six Sigma and its implementation
List and explain important Six Sigma metrics
Discuss the concept, working and benefits of Lean Six Sigma (LSS)
Examine the concept, working and goals of DMAIC and DMADV
Describe the integration of lean with DMAIC/DMADV
Explain the concept of lean thinking and the five principles of lean thinking
Describe the concept of constraints and the Theory of Constraints (TOC)
Compare lean thinking and the TOC
Describe the importance of integrating lean, six sigma and the TOC
Explain the concept of lean assessment
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Contents
Chapter 1
Introduction to Lean.................................................................................................................... 1
Chapter 2
Lean Management..................................................................................................................... 33
Chapter 3
Lean Management Concepts.................................................................................................... 71
Chapter 4
Lean Management Tools........................................................................................................... 93
Chapter 5
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Waste Identification, Measurement and Elimination......................................................... 123
Chapter 6
Facilitating Change Through Kaizen.................................................................................... 149
Chapter 7
Kaikaku and Kakushin............................................................................................................ 179
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Chapter 8
Lean Six Sigma......................................................................................................................... 201
Chapter 9
Lean Management Using DMAIC/DMADV........................................................................ 225
Chapter 10
Lean Thinking........................................................................................................................... 247
Chapter 11
Theory of Constraints, Lean and Six Sigma......................................................................... 265
Chapter 12
Lean Assessment...................................................................................................................... 283
Abbreviations.................................................................................. 309
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Curriculum
LEAN MANAGEMENT SYSTEMS
Lean, Lean Principles, Lean Techniques, Important Contributors, Lean Management, Lean
Management Process, Lean Management Concepts, House of Lean, Lean Asset Management,
Performance Management Aspect, Lean Management Tools, Traditional Operations vs. Lean
Operations, Waste Identification, Waste Measurement, Waste Elimination, Kaizen, 5Ms, Pull
and Push Systems, Just-in-Time (JIT), Kaizen, Lean Management Tools, 5S, OEE, PDCA, Error
Proofing/Poka-Yoke, RCA, Kanban, VSM, Process Mapping, Visual Controls, Takt Time, Jidoka,
Gemba, Kaikaku, Kakushin, Kaizen Teams, Ten Commandments of Kaikaku, Five Whys, Lean
and Six Sigma, Lean Six Sigma, Six Sigma Metrics, DMAIC, DMADV, Integration of Lean with
DMAIC/DMADV, Lean Thinking, Five Principles of Lean Thinking, Theory of Constraints
(TOC), Integration of Lean, Six Sigma and TOC, Lean Assessment.
Lean Management Systems. The subject is divided into 12 chapters. A brief description of all the
12 chapters is given below:
Chapter 1: Introduction to Lean

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Meaning of Lean, Principles of Lean, Achieving Overall Reduction Through Lean, Prominent Lean
Techniques, Early Contributions in Lean, Contribution of Henry Ford, Contribution of Kaoru Ishikawa,
Contribution of Armand V. Feigenbaum, Contributions of Taiichi Ohno and Shigeo Shingo, Contribution
of Bill Smith, Contribution of Michael L. George, Contributions of Charron, Voehl, Harrington and
Wiggin, Contribution of H. James Harrington, Contribution of General Electric
Chapter 2: Lean Management
Lean Management, Nature of Lean Management, Process of Lean Management, Lean Metrics, Benefits of
Lean Management, House of Lean Management, The Foundation, JIT And JIDOKA – The Two Pillars of
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House of Lean Management, The Roof: Customer Focus and Related Goals, Lean Management System,
Foundation Stones of the Lean Management System, Performance Management Aspect of Lean, Lean
and Asset Management, Lean and Risk Management, Lean Production and Power of Lean Production,
Lean Management in Lean Production, Mass Production Concept, Mass Production vs. Lean Production
vs. Craft Production
Chapter 3: Lean Management Concepts
Philosophy of Traditional Operation and Lean Operation, Concepts Used in Lean Management, Waste,
Kaizen, The 5Ms, Repetitive Flow, Point of Use Storage (POUS), Pull and Push Systems, Value-added
Actions, No Value-added Actions, Business Value-added Action, Value Stream Management, Quality at
the Source (QATS), Just-in-Time (JIT), Process Input Variables, Process Output Variables
Chapter 4: Lean Management Tools
Lean Management Tools, Benefits of Using Lean Management Tools, Types of Lean Management Tools,
5S Workplace Organisation, Overall Equipment Effectiveness (OEE), Plan Do Check and Act (PDCA),
Error Proofing/Poka-Yoke, Root Cause Analysis (RCA), Kanban, Value Stream Mapping (VSM), Process
Mapping, Use of Visual Controls, Total Productive Maintenance (TPM), Takt Time, SMART Goals,
Bottleneck Analysis, Continuous Flow, Policy Deployment (Hoshin Kanri), Automation (Jidoka), Gemba
(Place of Action)
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Chapter 5: Waste Identification, Measurement and Elimination
Concept of Waste in Lean, Identification of Waste, Causes of Waste in Processes, Value Addition to
Work, Power of Observation, Three Types of Waste, Areas of Waste, Overproduction: Identification
and Causes, Excess Inventories: Identification and Causes, Defects: Identification and Causes, Extra
Processing: Identification and Causes, Waiting: Identification and Causes, Motion: Identification and
Causes, Material Movement: Identification and Causes, Underutilisation of People: Identification and
Causes, Behaviour: Identification and Causes, Waste Measurement Techniques, Elimination of Wastes
Chapter 6: Facilitating Change Through Kaizen
Change, Characteristics of Change, Importance of Change, Types of Change, Resistance to Change,
Causes of Resistance, Management of Resistance to Change, Development of Lean Six Sigma,
Organisational Change, Kaizen, Five Elements of Kaizen, Tools of Kaizen, Kaizen Principles, Benefits of
Kaizen, Kaizen and TQM, Kaizen Process for Problem Solving, Start Gemba, Conduct Gembutsu, Take
Temporary Measures, Root Cause Analysis (RCA), Standardise, Kaizen Teams, Roles of Kaizen Teams,
Target Areas of Kaizen Teams
Chapter 7: Kaikaku and Kakushin
Radical Change Method (Kaikaku), Ten Commandments of Kaikaku, Kaizen Vs. Kaikaku, Five Whys
Technique, Origin of the Concept, Kaikaku and Five Whys, Concept of Kakushin (Innovation), Difference
Between Kaizen, Kaikaku and Kakushin
Chapter 8: Lean Six Sigma
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Meaning of Six Sigma, History of Six Sigma, Benefits of Six Sigma in an Organisation, Six Sigma Process,
Sigma Levels and Six Sigma Metrics, Defects Per Opportunity (DPO), Defects Per Million Opportunities
(DPMO), Process Capability and Sigma Level, Throughput Yield and Sigma Level, Concept of Lean Six
Sigma, Benefits of Lean Six Sigma, Working of Lean Six Sigma
Chapter 9: Lean Management Using DMAIC/DMADV
Goals of Lean Management, Concept of DMAIC, Working of DMAIC, Concept of DMADV, Working of
DMADV, Goals of DMAIC and DMADV, Integration of Lean with DMAIC/DMADV
Chapter 10: Lean Thinking
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Lean Thinking: Origin and Concept, Five Principles of Lean Thinking, Defining Value, Identifying and
Mapping the Value Stream, Creating Flow, Establishing Pull-based Production, Pursuing Perfection
Chapter 11: Theory of Constraints, Lean and Six Sigma
Meaning of Constraints, Theory of Constraints (TOC), Steps in the TOC, Increase in Profit through TOC,
Lean Thinking Vs. TOC, Theory of Constraints and Achievement of Lean Effectiveness, Integrating
Lean, Six Sigma and Theory of Constraints
Chapter 12: Lean Assessment
Lean Assessment, Lean Assessment Tools, Lean Enterprise Self Assessment Tool (LESAT), Why to do
Lean Assessment?, Who Conducts Lean Assessment?, Process of Lean Assessment, Scoring, Evaluation,
Planning and Execution
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BOOK REFERENCES
Charron, R., Harrington, H., Voehl, F., & Wiggin, H. (2015). The Lean Management Systems
Handbook (1st ed.). Florida: CRC Press.
A Beginner’s Guide to Lean: Standardized Work — The Linchpin of Lean |Association for
Manufacturing Excellence. (2019). Retrieved 19 July 2019, from https://www.ame.org/target/
articles/2013/beginners-guide-leanstandardized-work-%E2%80%94-linchpin-lean
Mann, D. (2010). Creating a Lean Culture. New York: Productivity Press. Floyd, R. C. (2010).
Liquid Lean: Developing Lean Culture in the Process Industries. New York: Productivity Press
Gopalakrishnan, N. (2010). Simplified Lean Manufacture. New Delhi: PHI Learning.
Womack, J., & Jones, D. (2013). Lean Thinking. London: Simon & Schuster, Limited.
ONLINE REFERENCES
CIO information, news and tips - SearchCIO. (2019). Retrieved 15 October 2019, from
https://searchcio.techtarget.com/
Kanban Software for Lean Project Management | LeanKit. (2019). Retrieved 15 October
2019, from https://leankit.com/
lean.org - Lean Enterprise Institute | Lean Production | Lean Manufacturing | LEI | Lean

IT
Services. (2019). Retrieved 15 October 2019, from https://www.lean.org/
Planet Lean: the official online magazine of the LGN. (2019). Retrieved 15 October 2019,
from https://planet-lean.com/
Quality-One | Quality and Reliability Services. (2019). Retrieved 15 October 2019, from
https://quality-one.com/
The Global Voice of Quality | ASQ. (2019). Retrieved 15 October 2019, from https://asq.org/
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ROAD MAP
Theory of Constraints,
Lean Assessment
Lean and Six Sigma
Lean Thinking
Lean Management
Using DMAIC/DMADV
Lean Six Sigma
Kaikaku and
Kakushin
Facilitating Change
Through Kaizen
Waste Identification,
Measurement and Elimination
IT Lean Management
Tools
Lean Management
Concepts
Lean Management
Introduction to Lean
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CHAPTER
1
INTRODUCTION TO LEAN
Table of Contents
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Chapter Objectives
Introduction
Learning Outcomes
1.1 Meaning of Lean
1.1.1 Principles of Lean
1.1.2 Achieving Overall Reduction Through Lean
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1.1.3 Prominent Lean Techniques
Self Assessment Questions
1.2 Early Contributions in Lean
1.2.1 Contribution of Henry Ford
1.2.2 Contribution of Kaoru Ishikawa
1.2.3 Contribution of Armand V. Feigenbaum
1.2.4 Contributions of Taiichi Ohno and Shigeo Shingo
1.2.5 Contribution of Bill Smith
1.2.6 Contribution of Michael L. George
1.2.7 Contributions of Charron, Voehl, Harrington and Wiggin
1.2.8 Contribution of H. James Harrington
1.2.9 Contribution of General Electric
1.3 Summary
1.4 Key Words
1.5 Case Study
1.6 Short Answer Questions
1.7 Higher Order Thinking Skills (HOTS)
Table of Contents
1.8 Answer Key
A. Self Assessment Questions
B. Short Answer Question
C. Higher Order Thinking Skills (HOTS)
1.9 Suggested Books and e-References
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C H A P T E R O B J E C T I V E S
After studying this chapter, you will be able to:
 Explain the meaning of lean

 List and define the principles of lean
 Explain how organisations can achieve an overall reduction through lean
 Describe important lean techniques
Summarise the contributions made by various organisations and individuals to

the field of lean
INTRODUCTION
The concept of lean was initially developed from the Toyota Production System
(TPS) in the 1950s-60s. Soon, it grew into a globally accepted philosophy for
attaining efficient manufacturing and operations and for continual improvement
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of systems and processes.
Taiichi Ohno was the Chief Production Engineer of Toyota. Ohno and Toyota
knew that they needed to speed up and improve their production capabilities
which required rethinking the entire production line. Ohno has put in 25 long
years of his life to research, discover, analyse and evaluate various lean production
ideas to develop the widely acclaimed Toyota Production System. At the very core
of lean philosophy lies the concept of zero wastage, providing products in a timely
manner using Just-in-Time manufacturing. Lean manufacturing aims at providing
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value to customers by removing wasteful resources or non-value-adding activities.
Lean is also associated with the concept of Kaizen (continuous improvement).

Kaizen philosophy is related to the removal of all wastes in the value delivery
system. To remove wastes, each employee involved in a process should actively
identify problems and seek opportunities for betterment. How does one do that?
How can one eliminate wastes through lean? Does lean provide any magic formula
to reduce waste? From where does one start? What are its techniques? This chapter
will provide you answers to all these questions.
The opening section of this chapter describes the principles, methodology and
techniques of lean. The latter section of the chapter explains the contributions made
by various individuals/researchers or organisations towards the development of
the lean concept.
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LEARNING OUTCOMES
The content and assessments of this chapter have been developed to achieve the
following learning outcomes:
Justify the widespread adoption of lean management
Examine the applicability of various lean principles in different types of
industries
Advise on the applicability of various lean techniques
Appreciate the contribution made by various authors, scientists and
entrepreneurs to the study of lean management
1.1 MEANING OF LEAN

Although the origin of lean philosophy can be traced back to 1911 when lean ideas
were originally developed by Frederick Taylor, the term lean was first coined and
used by John Krafcik. In 1988, Krafcik used the term ‘lean’ in his article titled
Important
Concept
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Triumph of the Lean Production System.
There is no one single definition of the word ‘lean’, and it is open to many
interpretations. However, there are certain aspects of lean that are agreed upon
An obsolete unanimously. In management studies, lean is not just a manufacturing system;
manufacturing it is, rather, related to various aspects of business, such as payment processing,
process can have
service management, project management, etc. Lean aims at creating more value
90% wasteful
practices. Lean for customers with the fewest resources. Different countries may interpret this
manufacturing can core meaning of lean in different ways. For example, the US thinkers consider lean
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reduce waste to to be a system of tools and techniques for eliminating waste and adding value in
around 25%-30%. the processes. The Japanese consider lean to be a belief and not just a system or set
of tools.
Lean can also be expressed as a combination of 0% wastage and 100% customer-

defined value.
By implementing lean in their production processes, organisations can become

more adaptable to the external environmental changes. They can do this by
continuously identifying and removing wastes in their processes, reducing costs
and increasing profit margins.
Implementing lean does not require any grand launch. In fact, any worker
working at any level can start anytime with the lean process. All he/she has to do
is to evaluate the current state of processes he is involved in, define the customer-
perceived value, identify wastes that do not contribute to the value and remove
them altogether.
Organisations apply lean principles to achieve the following objectives:

Maximising customer value
Minimising waste
Reducing defects
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Reducing the production cycle time

Minimising inventory
Increasing the output quality
Maximising the utilisation of equipment and waste
1.1.1 PRINCIPLES OF LEAN

A lean organisation focusses all its efforts to continuously improve its processes
and to maximise customer value. It is a myth that lean can be applied to only
manufacturing organisations. Instead, lean can be applied, implemented and
adopted by any type of business organisation, provided it follows and abides by
the five key principles of lean philosophy.
James Womack, Daniel Jones and Daniel Roos introduced the five principles of
lean in their book titled ‘The Machine That Changed the World’.
Figure 1 presents the five principles of lean:
1. Determine
IT customer-defined
value
2. Identify,
5. Seek
analyse and map
perfection
the value stream
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4. Establish
customer pull 3. Make the
through the process flow
process
Figure 1: Five Principles of Lean
Please note that Figure 1 presents the five lean principles in the form of a cyclical
process because when a process or system undergoes lean principles multiple
times, the process continues to better itself in each cycle. Elements of waste are
removed in each cycle until no waste remains. Let us now discuss each principle
of lean in detail:
1. Determine customer-defined value: Customer-defined value refers to the
satisfaction that customers get after purchasing certain goods or services
relative to what they had to pay for it. A lean organisation must identify
the expressed or latent needs of customers. Sometimes, customers may not
be able to express value, particularly in the case of new technologies or
products. In such cases, organisations can use various techniques, such as
customer interviews, surveys, demographic profiling and Web analytics to
specify value from the customer’s viewpoint. This will help you determine
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what customers want, how they want it to be delivered, and how much they
Important
Concept are willing to pay for it.
Value Stream
2. Identify, analyse and map the value stream: Next, identify all the activities
Mapping (VSM)
is the process that contribute to the value and map them to the customer’s perceived value.
of analysing, Remove all the steps that do not create value. The steps that do not create
designing and value are considered as wastes. The wastes can be:
managing the flow
of materials and zz Non-value-added but necessary: These are unavoidable wastes and
information in order should be minimised.
to deliver a product
to a customer. zz Non-value-added and unnecessary: These are pure wastes and should
A value stream be removed.
map comprises
work streams By minimising and removing wastes, an organisation can provide the goods
and information required by customers and, at the same time, they can reduce the cost of
streams which are production.
classified as either
value-adding or 3. Make the process flow: After eliminating wastes from the value stream, the
non-value-adding. organisation streamlines the value-creating steps in a tight order so that the
A thorough analysis
of the value stream
product flows smoothly to the customer without any delay or obstruction.
helps in eliminating Some ways to streamline the flow of value-creating steps are:
the non-value-
adding items.
IT zz
zz
zz
Decomposing steps
Reconfiguring the production steps
Levelling out the workload
zz Creating cross-functional departments
zz Training employees on multiple skills
zz Training employees to become adaptive
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4. Establish customer pull through the process: As flow is created in the value
stream, the organisation enables customers to pull value from the subsequent
upstream activity. One of the biggest wastes in any production system lies in
the inventory. A pull-based system aims at limiting raw material and work-
in-process (WIP) inventory items, while ensuring the necessary materials
and information for a smooth flow of work. Thus, this system allows for
Just-in-Time (JIT) delivery and manufacturing. This means that products are
created just in the time they are required and in the quantity in which they are
required. Pull-based systems operate on the basis of customer requirements.
An organisation can satisfy the customers’ requirements by following the
value stream and working backwards through the production system.
5. Seek perfection: As a system follows the above four principles, the
organisation should aim for continuous process improvement. It means that
the organisation begins the process again and continues it till it reaches a
state of perfection where perfect value is created and zero waste is generated.
1.1.2 ACHIEVING OVERALL REDUCTION THROUGH LEAN

As already discussed, removing every type of waste is the fundamental aim of
the lean philosophy. Taiichi Ohno, the founding father of lean manufacturing,
identified three major obstacles to a company’s profit. These are Muda (wasteful
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activities), Muri (overburden), and Mura (unevenness). These factors are also
known as the 3Ms of waste in lean.
Figure 2 represents the 3Ms:
MUDA MURA
Activities that do not Workload that is not
add value balanced
IT MURI
Work that creates a burden for the

team members or processes
Figure 2: The 3Ms of Lean

Source: https://www.quality-assurance-solutions.com/Kaizen-Training.html
N ote
Every organisation should focus on removing Muda or wasteful activities. All
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Takt time is the
wasteful activities may not be removed from the work process as some of them
rate of production
required to meet are necessary; however, organisations should focus on reducing Muda to the
the customer maximum possible extent.
demand. It
indicates the Seven wastes or Mudas are:
frequency at which
a product should 1. Overproduction: This means producing more than the customer’s demand,
be manufactured which leads to additional costs. Overproduction leads to extra inventory,
to meet the which is a serious waste as it triggers the other six wastes. Extra inventory
customer demand.
leads to wasteful activities, such as additional transportation, excessive
motion, greater waiting time, etc. If a defect appears during overproduction,
then it needs to be reworked upon.
Some of the measures that can be taken to reduce overproduction wastes are:
zz Ensuring that the production speed is the same as the Takt time.
zz Using a pull-based (customer triggered) system to control the production
(Kanban)
zz Reducing set-up times to manufacture small-sized batches (SMED)
2. Waiting: This waste is generated when goods or tasks are not moving in the
production system, waiting for the next step to happen. Examples of waiting
include a finished good waiting to be delivered, employees waiting to start
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their work when there is a technical fault and systems are not working,
document waiting for the signature of manager, etc.
Some of the measures that can be taken to reduce waiting waste are:
zz Design processes to ensure a continuous flow of work to the customer
with no or minimum buffers between various steps of production
(continuous flow)
zz Develop standardised work instructions to ensure that consistent
methods are used for each step in manufacturing (standardised work)
3. Transportation: This waste is generated by the unnecessary movement
of resources (raw materials, work-in-process or finished goods). This
movement does not add value to the customer. It can also introduce costs
by damaging the quality of the product due to unnecessary movements.
Transportation may also require you to shell out additional costs for time,
space and machinery.
Some of the measures to reduce transportation waste are:
zz Design a tight sequential flow of materials from the time they are procured
till the time finished products are made available to the customers (value
IT zz
zz
stream mapping)
Minimise inventory (continuous flow)
Avoid continual changing of job priorities (theory of constraints)
4. Motion: This waste is caused due to unnecessary or complicated movement
of employees or equipment. This waste can lead to injuries and, thus, stretch
the production time and costs.
Some of the measures to reduce motion-related waste are:
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zz Create logically organised work areas where workers need to do
minimum tasks to finish their job
zz Use alternate equipment that reduces motion (value stream mapping)
5. Over-processing: This waste means doing more work than required to
produce what the customer needs. It can also mean providing more value
than required by the customer. Examples include adding extra features
to a product which might not be very useful. Such features will add to an
organisation’s expenses. This is a difficult waste to identify and remove.
Some measures to reduce over-processing waste are:
zz Compare customer needs to manufacturing specifications (Kaizen)
zz Identify potential ways in which the manufacturing process can be
simplified (Kaizen)
6. Inventory: These are the products (raw materials, work-in-process, or
finished goods) that do not meet the customer’s immediate need. These
wastes are triggered when companies overstock themselves in the hope
of meeting an unexpected surge in demand, and as a protection against
production delays, low quality or other issues. The resulting inventories
increase storage and depreciation costs.
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Some of the measures to reduce inventory waste are:

zz Procure raw materials only as they are needed (JIT)
zz Reduce or remove buffers between production steps (continuous flow)
zz Use measures to remove overproduction wastes (Takt time, Kanban, and
SMED)
7. Defects: These are products that require rework or are scrap. In most cases,
defected products are returned to the production, leading to increased costs
and time. In some cases, these products may require rework which increases
the labour costs.
Some of the measures to reduce defects are:
zz Design processes to eliminate defects (Poka-Yoke)
zz Design processes to identify inconsistencies, stop the process as and
when they occur and immediately address the problem (Jidoka)
zz Identify the most frequent defects and why they occur (Root cause
analysis)
Create standardised work instructions (standardised work)
zz
IT
In conclusion, lean philosophy advocates identifying non-value adding activities
and then reducing or removing them to realise various benefits, such as cost
reduction, productivity enhancement, improved quality and shorter delivery time.
1.1.3 PROMINENT LEAN TECHNIQUES

Some of the key techniques related to lean are:
Kaizen (continuous improvement): Kaizen is a Japanese word that means
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continuous improvement. It advocates that small continuous improvements
in the systems and policies result in big improvements in the process, paving
the way for organisation’s success.
5S: It is a technique using which any firm can become well-organised. It can
also be said that 5S is a system for organising the workplace for efficiency,
effectiveness and safety. Implementation of the 5S technique results in the
creation of a healthy work culture, employee satisfaction and customer
happiness. 5S refers to 5 Japanese words, which are as follows:
zz Seiri: In English, seiri means sort. An organisation can improve its
workplace by sorting out the hidden wastes and organising things well.
Label items as ‘critical’, ‘necessary’, ‘most important’, ‘not needed now’,
‘not needed’, and so on. Eliminate the useless wastes and only keep items
that are needed at the moment. Secure ‘critical’ and ‘most important’
items.
zz Seiton: In English, seiton means to organise or to set in order. An
organisation can reduce the time wasted in searching for important items
by putting every item in its designated place only.
zz Seiso: In English, seiso means to shine in the workplace. An organisation
should keep the workplace clean by decluttering it. Keep necessary
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documents in proper folders and files. Store all the items in cabinets and
drawers.
zz Seiketsu: In English, seiketsu means standardisation. There must be
some standard rules and policies in each organisation to ensure better
quality.
zz Shitsuke: In English, shitsuke means self-discipline. An organisation
must establish acceptable rules, policies, habits and behaviours and
ensure that all the employees abide by these.
Just in Time (JIT): JIT is a procurement method wherein the right quantity
of goods is sourced at the right place and at the right time, so that there is no
overstocking. Inventory reduction is the primary benefit of JIT. The concept
of JIT was developed by the Toyota Motor Company. The JIT philosophy
suggests that it is more cost-effective to procure materials as and when they
are needed rather than keeping inventory. Today, there are several examples
of JIT:
zz A furniture manufacturer makes a furniture item only after a customer
orders it.
IT zz
zz
A burger and coffee café prepares burger and/or coffee only when it
receives an order.
A publisher keeps the manuscripts of books readily available, but it
prints them only after receiving an order.
Visual management: Visual management is a lean technique which
emphasises using visual cues to communicate key information about a
workplace. Visual management is achieved by the use of control boards,
notice boards, graphs, colour coding, etc. All these serve as subtle modes
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of communicating information to the employees. Thus, any person in the
workplace can instantly see the current state of work, navigate his/her way
around the area, or track the performance of the team. Visual management
is used to visually communicate information related to work environment
safety, operations, storage, quality, performance and equipment.
Figure 3 shows an example of managing visuals using a display board:
Figure 3: Visual Management

Source: https://www.clarityvisualmanagement.com/technique/vm-visual-management/
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Value Stream Mapping (VSM): A value stream refers to the series of steps
used by an organisation to build solutions that create an uninterrupted
flow of value to customers. Value stream mapping is a technique to visually
identify wastes in a value stream and understand the flow of material and
information in it. In a value stream map, you can see all the actions, both
value-adding and non-value-adding, required for delivering a product.
Andon: This is an information tool that provides immediate, visible and
audible warning in case of any abnormality occurring within a process. This
enables the operations team to quickly identify problems, halt the production
process (if required) and address problems as they occur.
Gemba (The Real Place): This denotes the real place where the action takes
place — the shop floor or the production area. In Gemba, the value-adding
activities are performed. Organisations employ sophisticated tools and
technologies in Gemba and deal with workplace problems using a logical,
low-cost approach.
Total Productive Maintenance (TPM): This technique advocates the
fundamental preventive maintenance job to the operator itself because of the
following reasons:
zz
zz
IT
To reduce breakdown time of machine
To remove equipment breakdown
zz To reduce and remove defects and scrap
zz To reduce rework, safety problems, and mini stoppages
zz To increase speed of production
Takt time: Takt time provides a simple, reliable, and instinctive method
to pace the production speed so that it matches with the pace of sales.
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STUDY HINT
NASCAR pit crew Mathematically, Takt time is represented as:
has adopted SMED
technique that can Takt time = Operating time per shift/Customer requirement per shift
change 4 tyres
in less than 15
SMED (Single Minute Exchange of Die): This is a system for drastically
seconds. Earlier, lowering the time it takes to complete equipment changeovers. This technique
NASCAR had a was developed to achieve a changeover time which could be represented in
changeover time of a single digit (under 10 minutes). Taking cue from this goal, it was named as
15 minutes/tyre.
SMED. Changeovers comprise two types of activities:
zz Internal setup activities: Internal activities require stopping the
equipment.
zz External setup activities: Activities that can be completed while the
equipment is still running.
The SMED process aims at conducting the maximum possible activities
externally and then simplifying and streamlining all the internal activities.
This will provide the following benefits:
zz Reduce manufacturing cost
zz Produce smaller lot sizes
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zz Improve responsiveness to customer demand

zz Reduce inventory level
zz Smooth setups
Cellular layout (flexible operation): This is a technique where workstations
and equipment necessary for manufacturing a product are arranged close
together to facilitate continuous flow production of small lots. This will
provide the flexibility to manufacture a variety of low demand products,
while keeping the large-scale production consistent. Figure 4 shows a cellular
layout:
Output/
Section-5 Section-4
Finished Goods
Work Flow Section-3

IT Input/Raw
Materials
Section-1 Section-2
Figure 4: Cellular Layout

Source: https://pdfs.semanticscholar.org/8f25/5854b85da898d368c79ae2b8daeed9a65e16.pdf
Supply chain management: This is the design and management of processes

across suppliers, factories, warehouses and stores to effectively match the
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supply and demand. Supply chain activities convert raw materials and
components into finished products which are delivered to customers.
Heijunka (Production levelling): Heijunka is a Japanese word which means
levelling. For manufacturers, it is a difficult task to maintain a stable flow of
work to ensure that the production of products is as per demand and avoid
any overproduction. Heijunka is a technique which allows the optimisation
of capacity and reduces the unevenness in the production process. The
act of maintaining a stable flow of work is known as production levelling.
Heijunka helps the organisations to match the production with the market
demand. This helps in minimising the manufacturing waste. It basically
works by levelling the demand and production over a period of time. While
using Heijunka, the production is adjusted to match the customer demand
as accurately as possible. It is easier to meet the changes or fluctuations in
demand in case the organisations make products as per demand and keeps
only a small amount of buffer inventory.
Jidoka: This is also known as human automation. Under Jidoka, the
employees or the operators are empowered to stop a process as and when
they spot any problem. After the process is stopped, the problem is to be
fixed immediately and the root cause of the problem is to be identified so
that such problems do not occur in the future. Jidoka ensures that any low
quality or defective product is not passed on to the customers.
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Kanban: In Japanese language, Kanban means a signboard. Kanban is a

lean method for managing the workflow. Kanban works by visualising of
all the work as these moves through the process. Kanban is implemented by
using a Kanban board which presents all the work items visually. Each team
member can see the progress of every piece of work at any time. The most
basic type of Kanban board contains three columns corresponding to To-Do,
Doing and Done work items.
1. Lean = ______________ wastes + _______________ value.

S elf 2. What is the fourth principle of Lean?
A ssessment
a. Define value b. Establish pull
Q uestions
c. Create flow d. Map value stream
3. Value is defined by the organisation. (True/False)
4. Non-value adding but necessary steps should be reduced. (True/False)
5. The movement of a product from the inception to the customer without
any delay in a value stream is called _____________.
IT
6. The fifth principle of lean is to seek perfection. Here, perfection means
___________.
7. What is Mura?
a. Non-value adding but necessary activities
b. Wasteful activities
c. Overburden
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d. Inconsistency
8. Which of the following measures can help an organisation reduce
motion?
a. Standardised work b. JIT
c. 5S d. SMED
1.2 EARLY CONTRIBUTIONS IN LEAN

To understand the early contributions in lean, it is important to learn about a few
key historical facts. The history of modern manufacturing dates back to the time
when Henry Ford started mass production. Mass production is the production
system that manufactures large quantities of standardised products. Using mass
production, Henry Ford assembled the components of vehicles within a span
of minutes instead of hours or days. The results were that perfectly fitted and
replaceable vehicles were delivered to customers. This concept was so revolutionary
that the Ford Motor Company produced more than 15 million Model T cars
between 1908 and 1927. During the World War II, Ford’s mass production system
was adopted by the US military for the mass production of defence equipment.
13
In 1926, Sakichi Toyoda established the Toyota Automatic Loom Works in Kariya,
Japan. The company established its Automobile department in 1933, which was
separated and made into a new company in 1937 as Toyota Motor Company Ltd.
A few years later, it started manufacturing automobiles. In 1950, Eiji Toyoda, the
nephew of Sakichi, toured the Rouge plant of Ford in Dearborn, Michigan, US
for three months. At that time, the Dearborn plant was the most complicated and
largest manufacturing factory of Ford that produced almost 8000 cars per day. On
the other hand, Toyota manufactured only 40 cars per day.
Eiji Toyoda studied the Ford production system in the Dearborn plant and realised
that Toyota could not replicate Ford’s mass production system. There were several
reasons, including:
The Japanese market was too small for mass production.
The Japanese market was also very diverse. Customers’ requirements ranged
from compact cars to luxury cars.
The mass production system deployed in Ford focused on the quantity of
production rather than variation.
Eiji Toyoda consulted Taiichi Ohno to develop a new type of production system
IT
which could manufacture vehicles quickly, inexpensively and with better quality
and more variety. The challenge before Ohno was to manage the trade-off between
productivity and quality. His experiments led to the development of various
innovative concepts which became the foundation of the Toyota Production
System (TPS) as shown in Figure 5:
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Goal: Highest Quality, Lowest Cost, Shortest Lead Time
Just-in-Time Jidoka
Stop and notify

Continuous
abnormalities
Flow
Separate human
Takt Time
work and
Pull System
machine work
Standardised
Heijunka Kaizen
Work
Stability
Toyota Production System “House”
Figure 5: Toyota Production System (Lexicon, 2008)

Source: https://www.lean.org/lexicon/toyota-production-system
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The TPS was based on two key concepts:

Jidoka (automation with a human touch): When a problem occurred,
the equipment would stop immediately. This was done to prevent the
production of defective products. Jidoka enabled a single worker to visually
monitor and control several machines. It required workers to solve problems
right away at the risk of stopping the entire production line. Consequently,
workers needed to identify the root causes of the problems and solve them
immediately.
JIT: Each process produced materials only in the amount required by the
next process in a continuous flow. Thus, TPS produced what was required at
the time when it was required and in the required amount only. This enabled
the company to manufacture high-quality products efficiently by removal of
waste.
By implementing the philosophies of Jidoka and JIT, Toyota was able to manufacture
quality products much more efficiently than other organisations. It was also able
to fully satisfy customers’ requirements. Soon, it left Ford far behind in terms of
profit generation. The astounding success of Toyota compelled Ford executives
to look into TPS philosophies and adopt them for their production lines. All these
IT
developments are considered as the roots of lean manufacturing.
Let us study about certain significant contributions made to the lean philosophy.
1.2.1 CONTRIBUTION OF HENRY FORD

Henry Ford was born in a farm near Dearborn, Michigan. In 1883, he became
the Chief Engineer for Edison Illuminating Company. In 1903, he left his job to
N ote establish Ford Motor Company. In 1908, the Ford Motor Company introduced the
“Farmers waste Model T car, the vehicle parts of which were replaceable and simple. The beauty
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95% of their time of Model T was that a common man could drive and repair it.
on unproductive
activities.
Henry Ford introduced the concept of mass production, which reduced
Everything is
done by hand and manufacturing costs of the car and made it more affordable to the Americans.
seldom is a thought In 1908, the workers required an average station task time of 514 minutes. Ford
given to logical improved work techniques, did time and motion studies, which ultimately led
arrangement.” to the reduction of the average station task time. In 1913, Ford introduced the
– Henry Ford
assembly line, which lowered the cycle time to 1.19 minutes.
In 1914, Ford doubled the workers’ wage to $5 per day, which increased their job
retention. The reduced complexity of workers’ tasks plus their higher wages kept
workers’ motivation high. In addition to managing internal resources, Ford also
sought to lower the cost of raw materials. His Dearborn plan was an example of
vertical integration. Ford had a steel mill for producing steel to be used in vehicles,
a glass factory for manufacturing windshields, rubber plantations in Brazil for
tires, and iron ore mines in Minnesota. Ford also owned the ships that carried
the ore.
The history of lean manufacturing truly started with Henry Ford. His aim was
to make the best product possible by removing inconsistencies and waste. He
focussed on making employees work more efficiently. To do so, he developed the
flow of the production system, which started with raw materials and finished with
15
the vehicle delivery to a customer. He was the first one to integrate components,
human effort and moving conveyance to develop a manufacturing system.
Some major contributions of Henry Ford to the development of lean manufacturing

are:
Standardisation: Henry Ford developed a manufacturing system that
produced standard products, which did not allow for any deviation from
the best practice. Once a particular way was agreed upon as the best way to
do a process, then that way would be adopted and repeated everyday.
High wages: Ford paid high wages to his employees. His techniques
generated profits due to cost savings and Ford quadrupled his employees’
wages over 20 years.
Wasted movement: Ford designed his factories in a logical arrangement that
allowed his workers to complete the given tasks with the fewest steps and
movements.
Wasted materials: Ford identified various uses for the unused material
resulting from vehicle production, such as:
zz Distilling wasted wood into chemicals, which were then used to produce
IT zz
charcoal and other products
Converting blast furnace slag into road-paving material
zz Selling the sulphur produced from the cooking of coal as an input for
fertilisers
Welding: Instead of using large cast parts that required machine shavings,
Ford preferred to weld smaller parts together into a whole.
JIT manufacturing: Ford did not believe in keeping a large quantity of stock.
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He managed his supply chain by having sufficient materials on-hand to
manufacture his vehicles on demand.
Customer service: Ford conceptualised innovative ways to serve the
customers, he ensured that the cars were delivered to the customers on the
scheduled time.
All of the above techniques and practices contributed to the development of lean
methodology. However, Ford did not consider variation in his production system.
His processes only allowed for the manufacture of the same type of vehicle. For
example, if a customer wanted another model than Model T, then Ford’s production
line did not have any product for him. Toyota realised this deficiency in Ford’s
production system and profited by filling this gap.
1.2.2 CONTRIBUTION OF KAORU ISHIKAWA

Kaoru Ishikawa is credited with the development of various quality tools and
concepts, such as the Ishikawa diagram (cause and effect diagram), Company
Wide Quality Control (CWQC), etc. These tools and concepts are used frequently
in quality control and improvement processes. Therefore, he also came to be
known as the Father of Japanese Quality.
16
His major contributions to the development of lean manufacturing are:

Ishikawa diagram (cause and effect diagram): Also known as the Fishbone
diagram due to its shape, this tool is one of the seven basic quality control
tools. The lean methodology aims at reducing or removing wastes. The
Fishbone diagram groups all the possible causes of a problem and identifies
which causes have the greatest effect. This diagram is commonly used in the
process quality improvement.
Quality Circles (QC): A QC is a formal group of volunteers that regularly
meet to identify, evaluate and solve work-related issues. They discuss and
provide various solutions related to:
zz Improving occupational health and safety
zz Enhancing product design
zz Improving manufacturing processes
zz Improving the organisation’s culture
Volunteers are trained by specialists in human factors, problem identification,
data collection and analysis, and solution generation. The idea of quality
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circles was conceived by Edwards Deming in 1950. Ishikawa expanded the
concept. In 1962, the first quality circle was launched in Nippon Wireless and
Telegraph Company.
Focus on internal customer: Ishikawa stressed on the importance of
employee development. He opposed the practice of relying on specialists
for process improvement, as he believed that would limit employee
development. He stressed on the importance of total employee participation
for process improvement. According to him, each area of the organisation
can potentially contribute to the overall quality programme. Therefore, all
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areas should incorporate statistical methods in the internal and external
audit programs. Ishikawa said that internal quality control does not include
only internal employees but also the management quality, human aspects,
after-sales service and customer care.
1.2.3 CONTRIBUTION OF ARMAND V. FEIGENBAUM

N ote
Armand V. Feigenbaum was a quality specialist from the US who introduced
“An organisation
loses almost 15% – the concept of Total Quality Control (TQC) which became the foundation for the
40% of its capacity Total Quality Management (TQM) philosophy. His main contributions to lean
by not getting the manufacturing are:
things right as they
should be.” TQC: This is a system that integrates quality development, maintenance, and
– Feigenbaum improvement to ensure efficient production and customer service. According
to Feigenbaum, organisations must consider the following elements of
quality to enable internal and external customer focus:
zz Define quality from the customer’s perspective
zz View quality and cost as one and the same
zz Gain commitment from both individuals and teams to ensure quality
17
zz Embed quality permanently as a part of process improvement

zz Accept that quality and innovation are interrelated and mutually
beneficial
Hidden factory: Feigenbaum divided the cost of quality into two categories:
zz Cost of getting things right
zz Cost of not getting things right
Most organisations incur huge expenses by not getting things right as they
should be. This is known as the hidden factory. When a hidden factory
exists, interventions such as restructuring or downsizing are considered as
wasteful.
Quality accountability: According to Feigenbaum, quality is not a
responsibility of one department or individual, but it is a universal concept.
Each and every functional area is responsible and accountable for maintaining
quality control in the organisation. An organisation must manage quality
actively and make it visible at the top management level.
Quality costs: Feigenbaum introduced the concept of quality costs. According
to him, it was necessary for organisations to quantify the total cost of quality
IT as a part of process improvement. He challenged the traditional belief
that higher quality requires higher costs (in procuring quality machines
or materials or skilled labour). He stated that if a company quantified and
evaluated quality-related entries in its ledger, then it would be able to take
better decisions based on enhanced profits. Feigenbaum identified the costs
of good quality (prevention and appraisal costs) and the costs of bad quality
(internal and external failure costs).
According to Feigenbaum, the cost of quality can be presented as:
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Cost of Quality = Cost of Good Quality + Cost of Bad Quality = (Prevention costs +
Appraisal costs) + (Costs of internal failure + Costs of external failure)
1.2.4 CONTRIBUTIONS OF TAIICHI OHNO AND SHIGEO SHINGO

As already discussed, Taiichi Ohno was the pioneer of the Toyota Production
System (TPS). In the early 1950s, Toyota was on the verge of bankruptcy and could
not afford major investments in equipment or inventory. Taiichi Ohno developed
significant improvements in processes, which led to the TPS.
In 1947, when Ohno was the manager of the machine shop at Toyota, he
experimented with parallel lines and/or L-shaped processes. He also introduced
Jidoka to Toyota. In the 1950s, Eiji Toyota toured the US to observe its automobile
factories and evaluate the mass production process. Eiji shared his observations
with Ohno. Although Ohno realised the benefits of the mass production system to
achieve economies of scale, but it needed to be customised.
Earlier, Kiichiro Toyoda, the President of the Toyota Motor Company, had
established a seemingly impossible goal for the company to surpass the US auto
manufacturers. The initial estimates were 9:1, i.e., it took 9 Japanese workers to
equal the productivity of a single American worker. Ohno recognised that the
customised mass production system with the removal of waste could be the way
to level the scale for the Japanese auto companies.
18
The major contributions of Taiichi Ohno to the development of lean are:

The supermarket theory: Ohno was impressed by the American supermarket
concept where each aisle displayed inventory, allowing people to pull the
items they required as needed. He took this concept of pulling inventory
and developed the Kanban replenishment card for restocking. The Kanban
card works like the old ‘two-bin’ system of inventory management. Here,
inventory is stored in two bins. When the last item of the primary bin is
pulled out, the second bin is opened and inventory is used from there. The
second bin has a reorder card that triggers the purchase order to replenish
supply. Ohno combined the pull system with automatic replenishment.
Seven wastes: Ohno said that the best way to manage cost was to remove waste
of every form. You have already learned about the seven wastes in an earlier
section. Ohno’s theory led to the development of JIT inventory management.
However, his efforts were met with resistance from Toyota management
who wanted to stockpile inventory ‘just in case’. Ohno persisted with the JIT
inventory system and the eventual inventory reductions increased Toyota’s
productivity and profitability.
Taiichi Ohno also worked closely with the Japanese manufacturing expert, Shigeo
IT
Shingo. They had come together to develop manufacturing methods that could
efficiently create products of consistent quality. Shigeo Shingo is said to have
introduced Kaizen, the Japanese word for continuous improvement. The concept
of Kaizen went on to become a core principle of the lean methodology.
The main contributions of Shingo to lean development are:

JIT: This concept was mainly developed by Shingo and Ohno during their
Toyota days. JIT is an inventory management system in which all the
resources required for production such as labour and raw materials are
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procured as and when required. Some main elements of JIT are:
zz Having only the required amount of inventory at a given time
zz Improving quality to achieve zero defects
zz Reducing lead time by reducing setup times
zz Optimising queue length and lot sizes
An organisation must accomplish the above elements at minimum costs. This
will enable the organisation to reduce costs in an optimised and effective
way. The company ensures consistent results by using statistical methods.
SMED: Shingo also developed the current SMED process. He proposed the
following basic concepts of the SMED process:
zz Reduce setup time of dies
zz Smaller batch sizes for parts
The above concepts are useful for organisations that want to lower their costs.
They allow the manufacturing system to quickly adapt to design changes
in a cost-effective way. The SMED process also allows zero defects, higher
efficiency of equipment and high production rate.
19
Shingo’s main contribution to the SMED process was his suggestion to

identify and divide the time required for setup into the following two main
entities:
zz Internal time
zz External time
His theory has benefitted several organisations that have stamping
operations.
Zero Quality Control (ZQC): Shingo’s ZQC method was based on the
following principles:
zz Perform quality inspections at the source of the process instead of routine
sampling inspections.
zz Get immediate feedback from the quality checks and self-checks.
zz Develop Poka-Yoke design manufacturing devices. Poka-Yoke means
error prevention. It is a frequently used method in lean manufacturing to
ensure minimum errors in the production process.
Shingo identified 5 stages of Poka-Yoke, as shown in Figure 6:
IT 1 Define
Describe and define the problem
Measure
2 Research the frequency of the problem
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Analyse
3 Find the cause by carrying out problem analysis
Improve
4 Develop and implement a solution
Control
5 Measure the effect(s) of the adjustment
Figure 6: Poka-Yoke by Shingo

Source: https://www.toolshero.com/quality-management/poka-yoke/
According to Shingo, to achieve zero defects, it is important to consider the human

aspects in the factory dynamics. His main idea was to target the defect at its root
cause so that it can be effectively removed from the process.
1.2.5 CONTRIBUTION OF BILL SMITH

Bill Smith is known as the father of Six Sigma, the methodology used by businesses
worldwide for process improvement and quality control that minimises defects
and gains customer satisfaction.
20
He started work on the Six Sigma concept in the early 1980s. In two research
papers published in 1984, he identified the correlation between the performance
of a product in a field and the amount of rework done during the manufacturing
process. He also identified that the products which showed least non-conformance
to standards were rated as best by the customers after they were delivered to the
customer.
Smith identified latent defects as a reason for the early failure of products.
These latent defects in products were directly proportional to the defects in the
components and manufacturing process.
Encouraged by his discoveries, Bill Smith persuaded Bob Galvin, the then CEO
of Motorola, that he could improve their products with new ideas. In 1985, Smith
invented the term ‘Six Sigma’ for the expected level of design margin and quality
of the product.
Subsequently, Bill Smith started working with Michael Harry, another engineer,
to develop a standard formula for reducing defects. Their formula was MAIC
(Measure, Analyse, Improve, and Control). Their work for defect control helped
Motorola reduce defects by 1/100th in 4 years. Eventually, Motorola started
performing at the Six Sigma level (3.4 defects per million units produced). Two
IT
years after Smith introduced Six Sigma, Motorola was awarded its first Malcolm
Baldridge National Quality Award in 1988. In the next decade, Motorola grew five
times in sales with 20% increase in profits each year. The company was able to save
a cumulative amount of $14 million due to Six Sigma. Its stock price compounded
to an annual rate of 21.5%. Motorola also established the Six Sigma Research
Institute (SSRI) to accelerate the scope of ‘Six Sigma and Beyond’. Allied Signal
and General Electric adopted the Six Sigma concept in 1993 and 1995, respectively.
1.2.6 CONTRIBUTION OF MICHAEL L. GEORGE

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Michael L. George is the author and co-author of several books on lean and Six
Sigma, such as Fast Innovation, Lean Six Sigma, Lean Six Sigma for Service,
and Conquering Complexity in Your Business. A holder of BS and MS degrees
in Physics, Michael George has several patents in his name in the field of waste
reduction, cycle time reduction and complexity removal.
He started his career at Texas Instruments in 1964. In 1969, he started a venture
start-up company called International Power Machines. He listed the company in
the stock market and then sold it to Rolls-Royce. With the money from the sale, he
travelled to Japan to study the Toyota Production System and TQM.
Armed with the knowledge of the Japanese recipe for quality and manufacturing
success, Michael George established The George Group in 1986. The George
Group was established to let the US companies become competitive in terms
of cost, quality, and production-to-delivery cycle time to match their Japanese
counterparts. The George Group worked with more than 300 US companies
focussing on operational performance and shareholder value through Six Sigma
and lean efforts. In 2007, he sold The George Group to Accenture.
A major contribution of Michael George is the development of Lean Six Sigma
(LSS) methodology. He combined lean manufacturing with Six Sigma into a
21
single integrated program called LSS. Lean Six Sigma incorporates the speed and
impact of lean with the quality and variation of Six Sigma as shown in Figure 7:
Lean Six Sigma

Six Sigma
Lean Efficiency (Flawless Execution,
Effectiveness (Low
(No waiting time, Enhanced Customer
Variation, Good
No waste) Experience, Impact on
Quality)
Top and Bottom Lines)
Figure 7: Lean Six Sigma
1.2.7 CONTRIBUTIONS OF CHARRON, VOEHL, HARRINGTON AND

WIGGIN
Rich Charron, Frank Voehl, H. James Harrington and Hal Wiggin authored the
book titled The Lean Management Systems Handbook. This book describes the
critical components for sustainable lean management.
More than the traditional improvement tools, the book positions lean as a
IT
management philosophy. It describes how managers at all levels of an organisation
can integrate lean into daily activities of management. It also details the lean
philosophy and the essential beliefs and behaviours required to develop an
organisation’s culture towards this philosophy.
The book provides several practical applications of lean management. It explains
the lean management and leadership in the following two crucial aspects:
Maintenance and control
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Improvement
The book helps develop a revolutionary perspective of waste by explaining the
following questions:
How to see waste?
How to measure waste?
How to remove waste?
N ote How to develop an active change improvement workplace?
“Challenge
everything. There It helps to identify the most suitable lean tool for specific requirements to support
is no sacred cow an organisation-wide lean management system. It explains essential lean concepts
in SPI (streamlined to help new managers and leaders successfully apply the lean manufacturing
process
system in their respective fields. It also provides summaries and examples of the
improvement).
Every activity can most important lean management system tools.
always be done in
a better way.” In conclusion, the book provides a consistent roadmap to help an organisation
– Harrington deploy the lean management system across its value streams.
1.2.8 CONTRIBUTION OF H. JAMES HARRINGTON

Author H. James Harrington, who has co-written The Lean Management Systems
Handbook, was a pioneer of the Business Process Improvement methodology
22
to generate faster, major improvements in organisations. He has written several

books on process redesign and on doing the right things at the right time. One
such book is Streamlined Process Improvement.
According to Harrington, an organisation should select those processes for
improvement, which can provide it with the best-value future-state solution. It
is not necessary that those solutions are represented in the current best practices.
Using new approaches, such as simulation modelling, risk analysis, 5S and process
variation, Harrington suggested a streamlined process improvement methodology
called PASIC.
PASIC consists of the following five phases:
1. Planning for improvement
2. Analysing the process
3. Streamlining the process
4. Implementing the new process
5. Continuous improvement
IT
Each phase involves several activities to help managers analyse processes
and prioritise them for improvement. Each activity uses various tools, such as
flowcharts, VSM, process walkthrough questionnaires, statistical charts, checklists,
and simulation models. Managers can apply streamlining approaches using
several examples of waste, value-added activities, and best practices, as suggested
by Harrington.
1.2.9 CONTRIBUTION OF GENERAL ELECTRIC

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In the late 1980s, General Electric adopted Motorola’s Six Sigma methodology.
The company implemented Six Sigma methodology by focussing on employee
training for data-based problem analysis. At GE, each employee was required to
undergo a 13 day 100-hour long training program in Six Sigma methodology. The
employees had to complete a Six Sigma project by the end of 1998.
The Six Sigma training included the DMAIC process, which comprised the
following stages:
1. Definition or identification of the process
2. Measurement of process output
3. Analysis of process inputs for criticality
4. Improvement of process by input modification
5. Control of process by controlling the appropriate input
Complementary to the Six Sigma training program, GE also launched a mentoring
program where full-time Six Sigma Master Black Belt holders were specifically
hired for the implementation of Six Sigma. Each Master Black Belt trained and
mentored key process employees for the Black Belt level. Soon, GE deployed Black
Belt teams to implement Six Sigma projects throughout the organisation.
23
Finally, GE also executed strong effective leadership to ensure that the Six Sigma
program became successful. Under Jack Welch, the implementation of the Six
Sigma methodology got a major boost from his senior executives and employees.
Jack Welch associated incentives such as job growth and bonuses with Six Sigma
goals of quality improvement.
9. Which company is considered to be the birthplace of lean manufacturing?

S elf a. General Electric b. Toyota
A ssessment
c. Motorola d. Nissan
Q uestions
10. Automation with a human touch is called ______________.
11. Henry Ford is said to have an impact on all the following except:
a. Variation b. High wages
c. Wasted movement d. JIT
12. Who introduced quality circles?
a. Ishikawa b. Feigenbaum
IT c. Ohno d. Shingo
13. The seven wastes were proposed by:
a. Jack Welch b. Michael George
c. Taiichi Ohno d. Kiichiro Toyoda
14. Name any two enemies of lean methodology.
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1.3 SUMMARY
Lean is expressed as a combination of 0% wastage and 100% customer-defined
value. By implementing lean, an organisation can become more adaptable to the
external environmental changes. They can do this by continuously identifying
and removing waste in their processes, reducing costs and increasing the profit
margins. The five principles of lean are: Determine Customer-Defined Value;
Identify, Analyse and Map the Value Stream; Make the Process Flow; Establish
Customer Pull Through the Process; and Seek Perfection.
The three enemies of lean are Muda, Muri and Mura. The seven Muda (wastes)
are overproduction, waiting, transportation, motion, over-processing, inventory
and defects. Major Lean techniques include Kaizen, 5S, JIT, visual management,
VSM, Andon, Gemba, TPM, Takt time, SMED, cellular layout and supply chain
management.
The history of lean manufacturing started with Henry Ford and his revolutionary
mass production system. His aim was to make the best product possible by
removing inconsistencies and waste. Kaoru Ishikawa invented the main quality
tools and concepts, such as the Ishikawa diagram (cause and effect diagram) that
is frequently used in quality control processes. Armand V. Feigenbaum introduced
the concept of Total Quality Control (TQC), which became the foundation for the
24
Total Quality Management (TQM) philosophy. Taiichi Ohno was the pioneer of
the Toyota Production System (TPS). He implemented JIT inventory management
in TPS. Shigeo Shingo is credited to have introduced Kaizen. His collaboration
with Ohno in TPS introduced seven wastes, JIT, SMED, and zero quality control.
Bill Smith is the father of Six Sigma which is now used by businesses worldwide
for achieving process improvement and quality control. The main aim of Six Sigma
is to minimise the defects and gain customer satisfaction. Authors, Rich Charron,
Frank Voehl, H. James Harrington, and Hal Wiggin presented a premiere approach
called The Lean Management Systems Handbook. This book describes the critical
components of sustainable lean management. GE gave a strong impetus to Lean
Six Sigma methodology by strongly implementing it throughout the organisation
by training, mentoring and leadership support.
1.4 KEY WORDS

3Ms: These are the three enemies of lean, namely Muda (waste), Mura
(unevenness) and Muri (overburden).
Six Sigma: A quality-based approach to manufacturing that requires 4.5
sigma (standard deviations) in the long-term between the upper and the

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lower tolerance limits.
Andon: The signboards used in manufacturing areas that reflect the current
state of operations, such as current target, process breakdowns, etc.
Economies of Scale: Cost savings realised from increasing the size of the
operation.
Hansei: The sequence of self-reflection, assuming responsibility and
commitment to improvement.
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Jidoka: Semi-intelligent machines or processes that automatically halt if a
problem occurs.
1.5 CASE STUDY: LEAN SIX SIGMA TOOLS SUPPORT QUICK GROWTH
This case study describes how Discovery Health, the largest health insurance
company in South Africa, formalised a problem-solving approach to sustain the
company’s growth path and achieve its service mission.
The Challenge
Discovery Health wanted to sustain its growth path and achieve its service mission
to be ‘the best service organisation in the world’. To achieve this, the company
decided to:
Formalise their problem-solving approach
Prepare management at all levels with the required tools
The Solution
Discovery decided that Lean Six Sigma would be the best methodology to enable
their service vision. The company selected Lean Methods Group as a partner to
25
implement Lean Six Sigma. Lean methods group trained, coached and certified
more than 300 employees of Discovery at various Lean Six Sigma levels. They
deployed a ‘learn-apply-review’ approach where each personnel:
Received training on a Lean Six Sigma tool-set
Applied the tools to a project
Reviewed the application through formal coaching
Each trainee was assigned a project based on an actual issue in the company. Lean
methods helped trainees with project selection and problem-solving using Lean
Six Sigma tools. Lean methods implemented the train-the-trainer programs to
qualify Discovery to be self-reliant in training the staff.
In the first few years of deployment, Discovery realised that education and
development of staff were vital to build a common understanding of Lean Six
Sigma. Once their staff had begun to solve problems using Lean Six Sigma tools,
Discovery decided to calculate a Return on Investment (ROI) to projects and
initiatives.
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A unique feature of Discovery’s Lean Six Sigma program was that they chose
parts of the DMAIC (Define, Measure, Analyse, Improve, Control) roadmap and
emphasised on the parts that would resonate most with employees. This is because
they realised that Lean Six Sigma tools should be accessible as standalone tools.
The training material was customised to suit Discovery’s requirements. Instructors

used Discovery examples to make the program more relevant to learners. All
program delegates were given projects specific to Discovery.
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The concept of Defects Per Million Opportunities (DPMOs) was also incorporated
into Discovery’s quality-approach. This enabled the company to understand and
measure quality and variation. The DPMO approach was implemented in both
stand-alone and project-based improvements.
Results
The application of the Lean Six Sigma principles across Discovery improved the
problem-solving ability of their staff and reduced defects in quality metrics. Some
of the results achieved by Discovery include:
Ability to listen to and quantify the Voice of Customer (VoC)
More holistic approach to evaluating data
Tailored and formalised approach to project scoping, definition and
measurement
Improved understanding of processes and associated wastes
Improved ability to identify and fix the root causes of problems
New and innovative approaches to solving problems
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Conclusion
This case study of Discovery demonstrated how one can apply Lean Six Sigma
tools in a service environment to measure and improve variation and quality.
Discovery used some key Lean Six Sigma tools to focus on every aspect of the
process and was able to transform their continuous improvement approach.
The key tools used in their application of the Lean Six Sigma program were:
Voice of Customer (VoC)
Defining and scoping a problem
Data analysis (DPMO calculation)
Root cause analysis (5 Whys)
Solution generation (brainstorming)
QUESTIONS
1. How did Discovery implement Lean Six Sigma across the organisation?
(Hint: People were trained on Lean Six Sigma, learn-apply-review training
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approach, coaching, etc.)
2. Define the tools used by Discovery in the application of Lean Six Sigma.
(Hint: VoC, problem definition and scoping, DPMO calculation, 5 Whys,
brainstorming, etc.)
1.6 SHORT ANSWER QUESTIONS

1. What do you mean by a lean manufacturing system?
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Exam Check
a. Manufacturing system with minimum wastes and maximum productivity
b. Manufacturing system that produces items on demand
c. Manufacturing system in which items are manufactured to stock
d. Manufacturing system where items are engineered to order for a specific
customer
2. Which lean principle follows after you have specified value from the
customer’s perspective?
a. Establish pull b. Pursue perfection
c. Map value stream d. Create flow
3. Training employees on cross-training skills and becoming adaptive is a step
of which lean principle?
a. Establish pull b. Create flow
c. Map value stream d. Define value
4. A pull-based system with Kanban helps reduce which type of waste?
a. Waiting b. Transportation
c. Over-processing d. Overproduction
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5. Standard operating procedures help reduce which waste?

a. Transportation b. Waiting
c. Over-processing d. Inventory
6. Which method will you use to remove the waste caused due to unnecessary
movement of people?
a. Continuous flow b. SMED
c. 5S d. Takt time
7. Poka-Yoke is used to reduce:
a. Defects b. Inventory
c. Transportation d. Over-processing
8. If you label items in your workstation as ‘critical’, ‘necessary’, ‘important’,
‘not needed’, etc., then you are deploying which 5S technique?
a. Seiso b. Seiton
c. Seiri d. Shitsuke
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9. Only after taking an order, McDonald’s assembles and prepares it for the
customer. This is an example of:
a. JIT b. Kaizen
c. Seiketsu d. Visual management
10. Who is associated with mass production and quadrupling his employees’
wages over 20 years?
a. Thomas Edison b. Henry Ford
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c. Jack Welch d. Michael Dell
11. A voluntary group of people who meet to identify, analyse, and solve work
issues is called:
a. Brainstorming b. Delphi’s group
c. Quality circle d. SMED
12. Feigenbaum’s biggest contribution to Lean Six Sigma is:
a. Quality circle b. Quality cost
c. JIT d. Six Sigma
13. Who is credited with the development of the concept of Lean Six Sigma?
a. Michael George b. Bill Smith
c. Rich Charron d. Hal Wiggin
14. PASIC was proposed by:
a. Charron b. Voehl
c. Harrington d. Wiggin
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15. Who invented the DMAIC stages of Poka-Yoke?

a. Ohno b. Shingo
c. Ishikawa d. Feigenbaum
16. The steps that do not create value are called _____________.
17. Muri means ___________.
18. Doing more work than required to produce what the customer needs is
called ____________.
19. Design processes to eliminate defects are called ___________.
20. Shitsuke = ______________.
21. In a VSM, you can only see value-adding actions to deliver a product to a
customer. (True/False)
22. Andon is an information tool that alerts you in case of an abnormality within
a process. (True/False)
23. SMED is another name of a quick changeover. (True/False)
24. Ishikawa advocated hiring external specialists as against focussing on
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internal customers. (True/False)
25. According to Feigenbaum, higher quality comes with high costs. (True/False)
1.7 HIGHER ORDER THINKING SKILLS (HOTS)

1. Refer to List 1 and List 2, and choose the correct option:
List 1 List 2
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1. Gemba i. Creating a safe and organised work area
2. 5S ii. Visual management
3. Andon iii. Go and see the work
a. 1 – i; 2 – iii; 3 – ii
b. 1 – ii; 2 – i; 3 – iii
c. 1 – iii; 2 – i; 3 – ii
d. 1 – iii; 2 – ii; 3 – i
2. Assume that you are the production manager of an organisation that
manufactures washing machines. You estimated that the customer demand
is 35 units per day and the net available production time is 700 minutes. In
this case, which of the following holds true?
a. Takt time = 2 minutes
b. Takt time = 2450 minutes
c. Takt time = 0.5 minutes
d. Takt time = 20 minutes
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3. ABPL Ltd., an oil refinery, has started its operations recently. After being
in operation for over a year, its production system is experiencing high
variation and poor quality. Also, the waiting hours are long and there is a
lot of useless movement of employees. Suggest which quality technique or
philosophy is best for ABPL.
a. Lean Six Sigma
b. Just-In-Time
c. Total Quality Management
d. 5S
4. Mr. Lalit creates an app for an IT organisation, which displays a board
containing various categories as follows: Ready for Development, In
Development, Coding, Code Review, Ready for Build, Ready for Quality
Assurance, Quality Assurance and Completed. It can be said that Lalit has
developed a digital form of:
a. Kaizen
b. Kanban
IT c. JIT
d. VSM
5. Which of the following options has been mapped wrongly?
a. Poor automation – Motion
b. Lack of standards – Defect
c. Over-processing – Overlapping areas of authority
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d. Transportation – Poor plant design
1.8 ANSWER KEY
A. SELF-ASSESSMENT QUESTIONS
Topic Q. No. Answer

Meaning of Lean 1. 0%; 100%
2. b. Establish pull
3. False
4. True
5. flow
6. continuous process improvement
7. d. Inconsistency
8. c. 5S
Early Contributions in Lean 9. b. Toyota
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Topic Q. No. Answer

10. Jidoka
11. a. Variation
12. a. Ishikawa
13. c. Taiichi Ohno
14. Muda and Muri
B. SHORT ANSWER QUESTIONS
Q. No. Answer
1. a. Manufacturing system with minimum wastes and maximum
productivity
2. c. Map value stream
3. b. Create flow
4. d. Overproduction
5.
6.
IT
b. Waiting
c. 5S
7. a. Defects
8. c. Seiri
9. a. JIT
10. b. Henry Ford
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11. c. Quality circle
12. b. Quality cost
13. a. Michael George
14. c. Harrington
15. b. Shingo
16. wastes
17. Overburden
18. Over-processing
19. Poka-Yoke
20. self-discipline
21. False
22. True
23. True
24. False
25. False
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C. HIGHER ORDER THINKING SKILLS (HOTS)
Q. No. Answer
1. c. 1 – iii; 2 – i; 3 – ii
2. d. Takt time = 20 minutes
3. a. Lean Six Sigma
4. b. Kanban
5. a. Poor automation – Motion
1.9 SUGGESTED BOOKS AND E-REFERENCES
@ SUGGESTED BOOKS
Trent, R. (2009). End-to-End Lean Management. Boca Raton, Fla.: J. Ross.
Charron, R., Harrington, H., Voehl, f., & Wiggin, H. (2015). The Lean
Management Systems Handbook (1st ed.). Florida: CRC Press.
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E-REFERENCES
7 Wastes of Lean: How to Optimize Resources. (2019). Retrieved from https://
kanbanize.com/lean-management/value-waste/7-wastes-of-lean/
Lean | Lean Methodology | Quality-One. (2019). Retrieved from https://
quality-one.com/lean/
(2019). [Ebook]. Retrieved from https://www.leanmethods.com/wp-content/
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uploads/2017/11/lss_tools_discovery_lean_methods_case_study.pdf
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CHAPTER
2
LEAN MANAGEMENT
Table of Contents
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Chapter Objectives
Introduction
Learning Outcomes
2.1 Lean Management
2.1.1 Nature of Lean Management
2.1.2 Process of Lean Management
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2.1.3 Lean Metrics
2.1.4 Benefits of Lean Management
2.2 House of Lean Management
2.2.1 The Foundation
2.2.2 JIT And JIDOKA – The Two Pillars of House of Lean
Management
2.2.3 The Roof: Customer Focus and Related Goals
2.3 Lean Management System
2.3.1 Foundation Stones of the Lean Management System
2.3.2 Lean and Performance Management
2.3.3 Lean and Asset Management
2.3.4 Lean and Risk Management
2.4 Lean Production and Power of Lean Production
2.4.1 Lean Management in Lean Production
2.5 Mass Production Concept
2.5.1 Mass Production vs. Lean Production vs. Craft Production
Table of Contents
2.6 Summary
2.7 Key Words
2.8 Case Study
2.11 Answer Key
B. Short Answer Questions
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Lean Management
 Describe the concept of lean management

 Explain the fundamentals of the house of lean management
 Discuss the concept of the lean management system with other management systems
 Explain about the foundation stones of Lean Management System
 Describe the concept of Lean production and the power of lean management
 Differentiate among lean production, mass production and craft production
INTRODUCTION
Read In the previous chapter, you studied about the founding concepts of lean. The
chapter also explained about the five principles of lean and the 3M’s. Further,
Pre-read Connect
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you studied some of the most prominent techniques of lean. Towards the end, the
chapter described the early contributions made by various contributors such as
Henry Ford, Kaoru Ishikawa, etc.
Lean management was first adopted by a Japanese manufacturing organisation

Toyota to minimise the process wastes without affecting productivity. Toyota
developed several lean concepts which were further adopted by several other
organisations such as Intel, John Deere and Nike. After adopting the lean
management practices, these organisations were able to improve their productivity,
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cycle time and cost-efficiency.
Nowadays, lean management is practised by business firms working in different

industries such as healthcare, education, construction, services, etc., to maintain a
persistent and intensive focus on the process. Lean management aims to improve
the work processes without wasting time, effort and money. Therefore, lean
management focuses more on discipline, daily practices, tools used, etc.
In this chapter, you will study about the nature, process, metrics and benefits of
lean management followed by the study of the House of Lean Management, which
stands on two pillars, i.e., respect for people and continuous improvements. You
will also study about the foundation stones of the Lean Management System.
Later, this chapter discusses lean production and the power of lean production.
In the concluding section, you will study about the differences between mass
production, lean production and craft production.
35
LEARNING OUTCOMES
Anticipating the uses of lean management systems and the benefits related
to it
Solve numerical questions based on the calculations of WIP, cycle time
and takt time
Summarise the relationship between lean management and performance,
and between the lean management, asset and risk management
Recommend the use of lean in mass production
2.1 LEAN MANAGEMENT

The methodology of lean management is used by organisations to run businesses
while continuously improving their business processes and removing wastes in the
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form of time, money or effort. Wastes may be created through uneven workloads,
overburdened employees or processes, or due to any work that does not add value
to the product or service provided. Value-addition refers to any process for which
a customer is willing to pay. In lean management, business processes are analysed
to check the value addition, and then the steps that do not add value are modified
or removed. There are three primary stakeholders of lean management, which are
as follows:
Customers: Lean management aims to ensure that the customers are
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satisfied with organisation’s products, services and processes. For this, lean
Important management prioritises the customers’ requirements, and then modify the
Concept
Lean management processes accordingly.
is not just a system Employees: Employees are the most valuable assets of any organisation.
of working, but
a philosophy, a Their motivation, enthusiasm and efficiency help the organisation deliver
mindset that aims the best products or services. Therefore, lean management focusses on taking
to continuously care of the employees and keeps their interests in mind while developing
remove wastes in any policy.
all the processes
through small Organisation: An organisation comprises various individuals and entities,
and incremental including board members, Chief Executive Officers (CEOs), business owners,
improvements over
time.
managers and employees. It is managed by setting up various policies,
programmes and procedures. An efficient and balanced organisation is able
to meet its customers’ requirements. For efficient and effective working, an
organisation should minimise the waste and boost the productivity through
lean management.
2.1.1 NATURE OF LEAN MANAGEMENT

The nature of lean management can be described in the following points:
Essence of lean management lies in continuous improvement which is
practised by all organisational members.
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Lean Management
Lean includes a thorough study of work processes and systems using scientific

methods to find ways for improvements.
Lean strongly advocates for respect of people, including the voice of the
customer, employees, etc.
N ote Lean makes a distinction between value-added and non-value-added work,

and suggests for the removal of non-value-added work.
Honda Global
fundamentally Lean involves the elimination of all types of wastes in all forms.
believes in the
three joys, namely Lean practices lead to the creation of a work environment that assures quality
joy of buying, joy of and safety of both the customers and the staff.
selling and joy of
creating. Lean creates processes continually from the start till the end without any
interruptions.
2.1.2 PROCESS OF LEAN MANAGEMENT

Lean management requires changing the mindset of all the people associated with
an organisation, and, at first, it can be difficult to implement lean management.
Lean management process can be implemented by following steps as shown in

Figure 1:
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Set the clear goals
Establish a lean mindset
Begin with small steps and find a change agent

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Introduce different lean management principles
Figure 1: Lean Management Process
1. Set the clear goals: Establish the end goals that you want to achieve through
lean management and make everyone aware it. Explain the organisational and
individual benefits that will be achieved by implementing lean management
system. Some of the objectives that can be achieved by introducing lean the
management are:
zz Optimise the workflows by streamlining the work processes
zz Ensure timely delivery of products
zz Increase the profitability
zz Long-run sustainability of the business
zz Cost-efficient production
Irrespective of the goals of the organisation, the goals should be communicated
to all the employees associated with a process so that they can implement lean
management in their processes and remove obstacles timely and efficiently.
37
2. Establish a lean mindset: After establishing the end-goals, organisation

must develop a lean mindset in its employees. The organisation must ensure
that each employee has a clear understanding of the process and the benefits
associated with it. Employees must also understand the benefits that are
realised for them as well as for the organisation. The organisation should
help employees understand that lean process involves key activities, such
as delivering better customer value and removing wastes. It also involves
creating and nurturing an environment of shared leadership where
employees receive more responsibilities and take steps for continuous
improvement. Once employees understand the importance and benefits of
lean, they become much more receptive to its adoption.
3. Begin with small steps and find a change agent: Lean should be first
implemented on a small scale, and then the scale should be increased
gradually. For instance, an organisation can start lean implementation with
a small team which improves the current processes, and then lean can be
implemented in other departments. An organisation may also start with a
pilot group of members who have different responsibilities in their hands
and can be the change agents for their respective teams. Select the most
enthusiastic and influential people from different groups as the change
IT agents. This will help you in building a strong base for lean implementation.
4. Introduce different principles of lean management: After preparing
employees for lean management, brief them about the lean principles and
their significance. The five key principles of lean management are as follows:
A. Define value: Specify the value of work that a team is doing from
the customer’s perspective. Value is what the customer is paying for.
Consider what the team is delivering and what the customer gets from it.
For example, the quality assurance team is not directly providing value
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to the customer, but improving the overall value of the organisation.
Distinguish the activities on the basis of value-added activities and waste
or non-value-added activities. Lean identifies seven types of wastes
which an organisation deals with. It also explains that the waste activities
can be:
99 Pure waste activities: These activities are not necessary and must be
removed.
99 Necessary waste activities: These are necessary to support the value-
adding activities. For example, quality assurance is a necessary waste
activity. Although it does not generate direct value for the customer,
but it enhances the value of the production team.
B. Map the value stream: After identifying the value produced by a team, an
organisation must visualise its path to the customer. In lean management,
this is done through Kanban boards. The Kanban board is a tool used
for mapping each step of a process and visualising its value stream. An
electronic Kanban board presents the value streaming of a task in mainly
three stages as follows:
99 The first is the stage when the task is requested or when the order is
received and is ready to start. This stage is called Requested.
38
Lean Management
99 The second stage is In Progress. In this stage, a number of activities are

taking place, such as designing, development, testing and reviewing.
99 The last stage is considered as Done. This stage indicates that the
process has reached its final stage.
C. Create flow: Any kind of waiting is a waste in lean management.
Therefore, when creating a flow, you must ensure a smooth delivery of
the organisation’s product or service from the order-receiving stage to the
customer-delivery stage. This principle suggests that all the bottlenecks
that impede the workflow should be identified. These bottlenecks may
be due to lack of capacity, waiting on external stakeholders and delay in
reviews due to resource shortage. These bottlenecks must be removed to
create a smooth flow. If they cannot be removed, then make sure that they
do not impede the workflow. To do so, limit the amount of in-progress
activities for a team. Determine an acceptable number of in-progress
activities that will help the team achieve the maximum efficiency. Test
different limits of work-in-progress activities until a smooth flow is
achieved. Figure 2 shows an example of Kanban board used to identify
the bottlenecks in the process:
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Figure 2: Identifying Bottlenecks using a Kanban Board
Source: “Implementing the Core 5 Principles of Lean”, 2019
D. Establish pull: After creating a smooth flow, an organisation should

develop a pull system. An organisation should begin the new work only
if there is a demand for it and the team has a spare capacity. The aim
should be to build value that is required by the customer and avoid any
N ote overproduction. An organisation should focus on the two key metrics of
Lean management each task to develop a pull system. These two key metrics include cycle
enabled the
Virginia Mason
time and throughput. Cycle time is the time in which a team is actively
Medical Centre working to complete a task. Lean managers should aim for shorter cycle
to decrease 85% times. Throughput refers to the numbers of tasks completed in a preset
of wait states time period. Lean managers should strive for increased throughput.
for lab results
and increase E. Pursue perfection: Finally, an organisation should continuously take
productivity by measures to improve each step in the process of achieving the set target.
93%.
39
It should focus on value-adding activities and removal of all wastes

from the processes. This can be done through methods, such as PDCA
cycle which requires continuous improvement. To develop perfection,
a shared leadership model can also be developed. The team members
should be made owners of their tasks and should look for value-adding
activities and non-value-adding activities in their individual tasks and
remove the wastes accordingly. The performers may also be asked to
demonstrate to others how they introduced lean in their workflow and
how they bought incremental improvements. Team members who are
struggling to identify the bottlenecks should be guided appropriately. By
following these practices, lean management slowly becomes part of an
organisation’s culture.
2.1.3 LEAN METRICS

Lean metrics are the measures which are used in combination with Kanban boards
to control and monitor the speed and flow of processes. They can provide answers
to relevant questions such as:
How long does it take to complete a task?
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What is the average cycle time for each task?
Where does the task get stuck?
How long does the task wait?
How much time does it take to complete a customer’s request?
In case any of the workers are getting overloaded, how can his/her load be
relieved?
Before using any lean metrics, the team should check the quality of the data and
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ask the following questions:
What does this metric really measure?
What insights do the team want from this measurement?
Once the team understands these fundamentals, it can start using lean metrics,
which include:
Work in Progress or Work in Process (WIP): Work can only add the value
for customers or organisations only when it is completed. Therefore, the
team should track those work items that are started but yet not finished. This
will help team to improve the flow of value through the system and deliver
work with greater efficiency. Such work items can be tracked using the WIP
metric. Work in Progress represents all the work that is actively being done
at any given time. To calculate Work in Progress WIP, count the number of
unfinished work items in your system each week to determine how much
work is in process and is not adding value. Work in Process WIP is the total
work that the team has started or committed to but has not completed yet. To
measure Work in Process WIP, count the number of unfinished work items
or use a cumulative flow diagram.
40
Lean Management
Figure 3 shows an example of the WIP limit reached in code lane.
Figure 3: WIP Limit in Code Lane

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Source: “6 Lean Metrics to Increase Speed of Delivery | LeanKit”, 2019
LeanKit is a Kanban software that is used by organisations to optimise

their process flows. A digital Kanban board is maintained by LeanKit.
The Kanban board contains three classes (columns) of lanes, namely ‘Not
Started’, ‘Started’ and ‘Finished’. The ‘Not Started’ class contains backlog
and sub-lanes. ‘Started’ lanes contain the in-progress lane and other sub-
lanes. ‘Finished’ lanes include the Archive and sub-lanes. Refer to Figure 3,
‘New’ and ‘Estimate’ lanes belong to ‘Not Started’ class. Similarly, ‘Work’
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belongs to ‘Started’ class and ‘Done’ lane belongs to ‘Finished’ class. Also,
note that there can be various sub-lanes. For example, Test Design, Code,
Test and Deploy. Under each lane, different processes that are in various
stages are listed. For example, codes are being developed for design new
infrastructure and migrate systems processes.
This WIP limit is a trigger for the team members to remove the bottlenecks
before pulling new work items into the system. These WIP limits bring the
much-needed discipline among team members towards the completion of
work. In addition, using WIP limits also helps in avoiding multitasking,
overcommitting to work items and working against the team capacity.
Queues (wait states): When a team attempts to speed up some work, it often
does so by reducing the amount of time taken to complete each step in the
process. However, this is flawed logic. Work is often delayed by waiting
between two different stages rather than wait on an active stage. When a
work item waits between two different stages, a queue is formed. The team
can increase the speed of work by reducing the time that a work item spends
waiting in queues. Teams can use an efficiency diagram to know about
the workflow and how it can be improved. It will measure the difference
between the amount of work in queues and the total WIP in the system.
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Using an efficiency diagram, the team will be able to identify the percentage
of current WIP waiting in queues and try to minimise it relative to the total
WIP in the system.
Blockers: Blockers are used in Kanban systems to visually communicate that
a work item cannot move forward in the process. The work items that are
waiting in a queue require to be pulled into the next stage of the process.
On the contrary, there are some blocked work items that are waiting on an
external dependency or on some failure condition. Such work items are called
blockers and need to be identified. The team can use blockers to determine
flow in the process (flow metric). The team may simply count the number
of blockers at a given time and determine the time for which they remain
blocked. Reducing both the numbers will help the team to improve the flow
in the process.
Lead time and cycle time: These two metrics help a team determine how
long times take for a work item to flow through the value stream. However,
they measure different segments of a process. The team can also use these
metrics to evaluate the trends and forecast future work. Lead time is the total
time taken by a work item to move through the value stream from the time
a customer requests the work to the delivery of the work. It measures the
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duration of the work item from the start to the finish, including process time
and the time spent waiting in queues. Mathematically, it can be expressed as:
Total lead time = Sum of process lead times + Sum of queue lead times
The team can monitor lead time over a given period to determine whether
an implemented change has shortened the delivery time or lengthened the
N ote process. You can also use the lead time to forecast the percentage of work that
The amount of time will be completed in a given time frame. For example, the management can
taken in between evaluate the past performance of a team to forecast the lead time of the team’s
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the processes is current work. This will enable them to accurately estimate the customer
called as wait time.
downtime and determine methods to reduce it. Cycle time measures the
time taken by a work item to reach from point A to point B. For example,
a team is working on a new feature of a product. First, a product is created
for review, then it is sent to build, then to quality assurance and then it is
finally deployed. The amount of time elapsed between the time when the
work begins till the time the work is complete or the product is ready for
delivery is called as cycle time. You can measure the cycle time on each of
the above stages and try new ways to improve the system. Both the lead time
and the cycle time are used to improve the performance of a process. For
example, one can track the cycle time to determine the time takes for a work
item to go from the commitment state to the deployment state. The team can
measure the lead time of a process if they want to get an insight into the flow
of work through the value stream. By being flexible between lead time and
cycle time, the team will be able to improve specific parts of the process, thus
improving the overall efficiency.
Throughput (Flow Rate): This is the average number of units processed in
a time unit, such as cards per day or cards per week. This metric is defined
depending on what impacts the business system. Alone, it cannot be used
to predict future states. However, it can be reliably used in combination
with other metrics to make short-term forecasts of the delivery dates. The
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Lean Management
throughput rate or the flow rate calculates the rate at which the flow of units
passes through the process. The maximum throughput is the capacity of the
process. Mathematically,
Average Completion Rate (ACR) = Throughput Rate (TH) = Average output
per unit of time
Cycle time = WIP/ACR, or
WIP = Cycle Time × ACR
Example 1: A team is currently working on 180 websites which are at different
stages of development. The throughput rate is 10 per day. What is the cycle
time?
Solution: Cycle time = WIP/ACR = 180/10 = 18 websites per day
Little’s Law: Little’s Law is used to measure the cycle time. This simple law
simply states that the amount of Work in Process (WIP) is equal to the product
of the cycle time and the Throughput Rate (TR) or the Average Completion
Rate (ACR). Cycle time is calculated by dividing the flow time in terms
of WIP inventory (in units) by the average completion rate (in units) per
time period. It demonstrates how the changes made to a system’s input can
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impact its output. For example, reduction in WIP can reduce the estimated
cycle time.
Cycle time =
WIP
ACR
Example 2: A team has to print 100 books daily and there are 500 books in
various stages of publishing. Calculate the Cycle Time using Little’s Law.
WIP 500
Solution: Cycle time
= = = 5
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ACR 100
Process cycle efficiency: It determines how much of the process is actually
adding value to the entire process. The formula for calculating process cycle
efficiency is:
Process Cycle Efficiency = Value – Added Time/Cycle Time
A process is considered lean if the process cycle efficiency is more than 25%.
2.1.4 BENEFITS OF LEAN MANAGEMENT

Lean management has benefitted various industries across the spectrum. It has
gained significance because every organisation wants to grow in the long run. For
this, organisations need to remove waste in between the processes and become
more efficient and productive. It has been observed that the organisations that
use the lean management system are able to deliver more value to the customer
than the organisations which do not follow the lean. Some key benefits of lean
management are as follows:
Cost efficiency: Lean management has enabled businesses to maximise their
profits by controlling their costs. Lean practices help organisations to lower
their manufacturing and process costs by effectively removing the wastes. All
these savings will ultimately add to the profits earned by the organisation.
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Better customer relations: Lean management starts by defining value

from a customer’s perspective. A customer may value an organisation by
considering the following things:
zz The manner in which organisation’s staff interact or communicate with
them
zz The responsiveness of the staff towards their concerns and needs
zz The kind of experience a customer gets by using the product or service
Managers can analyse data of customer surveys to determine the value of
the product from the customer’s perspective and how well the organisation
is delivering that value to the customer.
Use of push and pull: If an organisation keeps piling up inventory for
some reason, then its expenses will hit the roof. To prevent the problem of
increasing inventory and overproduction, organisations implement a pull
strategy over a push strategy. A pull strategy explains that the later stages
in production (delivery of a product) determine the status of earlier stages
(starting of producing customer’s order). This strategy requires that an
organisation maintains inventory according to the quantity of order needed
by the customer. This will prevent organisations from overproduction and
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high carrying costs.
Enhanced quality: In the lean management system, each member of the
team needs to be more attentive to detail. Only then the team would be able
to reduce the number of defects and reworks in the process of manufacturing
products/services. If the processes are optimised to prevent defects, then the
time spent by each worker on rework will be reduced significantly. This, in
turn, will save organisations from paying additional labour cost.
Improved culture: As an organisation starts to understand the significance
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of lean management and implement it, the organisation needs to make
modifications in the culture of the organisation. Employees will be more
open to improvement and constantly seek ways to minimise the wastes.
Enhanced morale: Lean management facilitates regular communication
between managers and their subordinates about work and processes. It
encourages employees to participate in the decision-making process and
boosts their confidence. Employees are able to identify the areas of their
improvement in order to deliver better quality work.
1. From the raw material stage to the customer delivery stage, each step in
the process is identified. A process map is drawn to identify and remove
S elf all the steps that do not add value. This principle is called:
A ssessment
Q uestions a. Value
b. Value stream
c. Pull
d. Flow
2. Evaluating and defining value from the customer’s perspective is a
__________ process.
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Lean Management
3. Change agents for lean implementation must be influential. (True/False)

4. In which process are the Kanban boards used?
a. Define value
b. Create flow
c. Establish pull
d. Map value stream
5. The greater the throughput, the better is the process. (True/False)
6. _________ is the total work that the team has started/committed to, but
has not completed yet.
a. Takt time
b. Lead time
c. Work in Progress
d. Work in Process
7. The tool in Kanban that visually communicates that a piece of work
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cannot move forward in the process is called ________.
2.2 HOUSE OF LEAN MANAGEMENT

The house of lean management is a visual representation tool that used to
illustrate the key components of lean management and how these components
form a complete business system. In the house of lean, first, the foundation is laid,
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followed by the construction of the walls and finally the roof is created. Figure 4
presents a diagrammatic overview of the house of lean management.
The Roof
Lean Enterprise
Best Quality - lowest Cost - Shortest Lead Time
Just In Time Jidoka
Poka-Yoke and
Heijunka and
The Two Pillars of

Kanban
The House of Lean

5 Whys
Process Stability
The Foundation
People & Purpose
Figure 4: House of Lean Management

Source: (“Lean Principles | House of Lean | Lean Thinking”, 2019)
Let us now study the components of the House of Lean in detail.

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2.2.1 THE FOUNDATION

A solid foundation is necessary to implement the lean successfully in an
organisation. The foundation or base of the House of Lean has two major
components, which are as follows:
People and Purpose: A clear understanding of the goal of the organisation
(purpose) is communicated to the people. The strength of the foundation
depends on factors, such as strength of leadership, employee engagement,
employee development, mutual trust and goal or purpose. An organisation
can develop these elements by using Kaizen.
Process stability: Process stability ensures that the work is done in the right
manner by continually improving the processes. An organisation can use
lean tools such as control charts and value stream maps to understand the
processes, evaluate bottlenecks and analyse how to improve the processes.
The organisations can also use methodologies, such as 5S and TPM to
standardise the work elements and reduce the wastes.
2.2.2 JIT AND JIDOKA – THE TWO PILLARS OF HOUSE OF LEAN

MANAGEMENT
IT
The two pillars of the House of Lean Management are the two production concepts
used in the Toyota Production System (TPS). They are:
Just In Time (JIT): JIT is a system to produce the right products at the right
time in the right volume in the right sequence with as much quality as possible
with the least cost. JIT also produces products in the shortest possible lead
time safely and in an environment-friendly manner. The goal of JIT delivery
is to minimise inventory so that the organisation keeps only the absolutely
necessary levels of stock. This will reduce the inventory costs and make the
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production flexible. JIT pillar represents flow and pull of an organisation’s
production with cost effectiveness. Lean tools used to optimise production
are:
zz Heijunka: Heijunka is a tool used for production levelling. It enables an
organisation to manufacture goods at a consistent rate, thus augmenting
the JIT delivery. It deeply studies the order related fluctuations, and then
plans production accordingly.
zz Kanban: It works as a JIT system where goods are produced only when a
customer requests for them. This system, thus, optimises the organisation’s
output and the use of workspace. In addition, it also reduces the size of the
organisation’s inventory, removes the overproduction, underproduction
and the WIP. Kanban alone is not sufficient to optimise production.
STUDY HINT Therefore, it should be used with Heijunka to handle fluctuations and
5 Whys is level production.
the iterative
interrogative Jidoka (Automation): This is an act to equip a machine with a device that
technique which is will stop the machine automatically if any defect is detected. The machine
used to represent does not start until the defect is corrected. Jidoka empowers an operator to
the cause and
effect relationship
oversee more than one machine at a time. This also ensures that enhanced
of a particular production is not wasted and delivers only value-adding results. This second
problem.
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Lean Management
pillar of the House of Lean focusses on built-in quality, and, hence, represents
quality optimisation. The tools used to optimise quality are:
zz Poka-Yoke: This involves designing a process where mistakes are
eliminated when they occur. It aims to create perfect quality goods
without the need for inspection.
zz 5 Whys: This involves analysing a problem and asking ‘why’ it happened
until the root cause of problem is identified. By addressing the root
cause, the team will be able to solve the problem and prevent from its
reoccurring.
2.2.3 THE ROOF: CUSTOMER FOCUS AND RELATED GOALS

The top of the house (roof), which is mostly in the shape of a triangle, signifies what
the organisation should aim for and what should be its focus. The roof represents:
Internal performance goals: These are the Key Performance Indicators
(KPIs) that the organisation needs to achieve to produce goods in an efficient
manner.
External performance goals: These represent the customers’ needs that the
Important
Concept
Each step in the
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organisation needs to meet. Both the internal and external performance goals
take shape in the form of an organisation’s strategy and strategic goals. The
major elements of the roof of the House of Lean include:
zz Providing the best quality
lean process is
VACAF (Valuable, zz At the lowest cost
Available, Capable,
Adequate and zz With the shortest possible lead time
Flexible).
The House of Lean streamlines the processes in a way that the organisation is able
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to meet customers’ requirements by removing waste and making alterations as
and when required.
8. Which of the following forms the first base of the House of Lean?
S elf a. Flow and Pull
A ssessment
b. Process stability
Q uestions
c. People and Purpose
d. Best quality
9. The basic principles of lean based on which an organisation delivers
value to its customers are represented by ________ of the House of Lean.
10. The roof of the House of Lean can only represent external performance
goal, i.e., customer focus. (True/False)
2.3 LEAN MANAGEMENT SYSTEM

Lean management system aims to create an adaptive environment in an
organisation. The environment so developed should generate maximum value
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for all the primary stakeholders. This system also correlates the skills of the team
members with their style of working for improving an organisation’s culture. Lean
management system reinforces that an organisation’s culture should be developed
in such a manner that it promotes continuous re-evaluation. This involves giving
regular feedback to the team members, identifying opportunities for improvement
and taking corrective measures.
2.3.1 FOUNDATION STONES OF THE LEAN MANAGEMENT SYSTEM

Lean management changes an organisation by managing the five key foundation
stones of an organisation. Lean can be managed successfully by combining and
managing these five foundation stones together. The five foundation stones of lean
management system are shown in Figure 5:
Process Management Excellence
IT Project Management Excellence
Change Management Excellence
Knowledge Management Excellence
Resource Management Excellence

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Figure 5: Five Foundation Stones of Lean Management System
In order to manage these five foundation stones, an organisation needs to do the

following:
Manage its processes and continually improve the processes
Manage its projects
Manage the magnitude and quantity of changes to be implemented
Manage the knowledge because it is the source of a competitive advantage
Manage the resources and assets
Let us now discuss the significance of each Foundation Stone (FS).
FS I: Process Management Excellence

Process management is the first and most basic step in improvement methodology.
There are two basic approaches for managing resources, namely micro-level
approach and macro-level approach. Under a micro level approach, processes
within a team or department need to be managed. In contrast, under a macro-level
48
Lean Management
approach, the processes that flow across teams/departments/functions need to be

managed. Process improvements can also be brought about by using DoE, RCA,
Process Capability Studies, quality circles, six sigma, JIT, supplier qualification,
etc.
FS II: Project Management Excellence

It is a very well-known fact that majority of the projects, especially the IT projects
face failure. For any organisation, a project is a set of mission-critical activities
which lead to delivery of quality products in a predefined time. Most advanced
and acclaimed organisations are able to complete 90% of their projects within
10% of their budget and schedule. Also, Information System organisations are
able to bring down their projects’ cost overruns, delays and cancellations by 50%.
Organisations, nowadays, run multiple projects at any given time. Therefore,
they need to manage their projects portfolio in a lean environment. Achieving
excellence in project management involves making use of project management
tools to effectively manage an organisation’s projects in a lean manner. Also, the
use of such tools is integrated in an organisation’s overall operations. In other
words, an organisation should effectively integrate its projects, resources and
knowledge to obtain business intelligence.
IT
FS III: Change Management Excellence
To grow and achieve new heights, an organisation must keep incorporating
changes in processes or systems. The changes incorporated should be such that
they improve an organisation. When introducing changes, it becomes necessary to
manage the changes also. In a lean environment, an organisation should be able to
achieve change management excellence which involves the following three things:
1. Define what change is to be made
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2. Define how the said change will be made in a lean manner
3. Make the change happen in the context of the lean management system
FS IV: Knowledge Management Excellence

Nowadays, knowledge (or information) and its effective management have become
a critical factor in an organisation’s success. The world is today overflowing with
large amounts of knowledge that it is very difficult to absorb it. Information present
in the computer systems, files and in the mind of the human resources needs to
be managed by using an appropriate Knowledge Management System (KMS). For
developing a KMS, an organisation may follow the steps given below:
1. Define requirements
2. Evaluate the infrastructure requirement
3. Design and development of KMS
4. Pilot testing
5. Software deployment
6. Continuous improvement
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FS V: Resource Management Excellence

An organisation needs to manage its resources wisely because when insufficient
resources are present, it leads to failure of projects and when resources are present
in excess, it leads to wastage of resources and excess costs. Most important
resources include money and manpower. Apart from these, some other important
resources include stockholders, management, suppliers, inventory, boards of
directors, alliance partnerships, real estate, knowledge, customers, patents,
investors, goodwill and organisational premises. An organisation needs to excel
in managing these resources in a lean management environment. Each of the
resources needs to be managed in a unique manner.
2.3.2 LEAN AND PERFORMANCE MANAGEMENT

It is a recognised fact that lean is a methodology which is adopted by organisations
to achieve superior performance and competitive advantage. Irrespective of the
sector or industry in which an organisation operates, the management has to
concentrate on the following four major roles:
i. Performance Management
ii. Risk Management
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iii. Asset Management
iv. Resource Management
The management organises the organisation in this manner to add value for its
customers. Lean management is the foundation which affects all these areas of
management which usually remain separate. Figure 6 shows how lean management
affects the above-mentioned four areas.
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Performance
management
Asset Lean Risk Management

Management Management
Resource
Management
Figure 6: Four Integrated Management Roles in Lean Management
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Lean Management
An organisation can achieve the benefits of lean performance by adopting

lean business drivers and ensuring that these drivers are aligned with the
resources. Out of all these management roles, lean organisations majorly focus
on performance management. Performance management is achieved through
continuous improvement programs which, in turn, include various elements such
as education, socio-technical development and change management.
In the last two decades, the concepts of lean management and performance
management have grown remarkably, and hence the concepts are now considered
as major themes under the Operations Management. Lean management has
become a complex and multidimensional subject of study. Earlier, performance
management was believed to be the practice of evaluating organisational
performance, but now it is considered as a comprehensive system of management
for executing the strategy and managing the operations and supply.
Various researchers have supported the performance management systems, used
in lean organisations, have an impact on the performance of the organisation. But
the available literature explains this conceptually. There are no studies to show
the empirical evidence of the impact of using the performance management
systems in lean organisations on the performance of the organisations. The
impact of performance management is measured by using certain indicators. The
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performance measures employed by the lean organisations and these include
financial as well as non-financial measures as shown in Table 1 as follows:
Table 1: Performance Measures Employed by the Lean Organisations

Domain Non-Financial Indicators Financial Indicators
of Use
General zz Quality – ease of servicing product, zz Cost – production full
operations defects per unit, reduction of defects cost, labour cost, raw
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through automation, service quality, material cost, operating
quality rating, quality of new product expenses, variable cost
development projects, scrap and against budget, cost
rework, quality conformance per operation hour,
zz Flexibility – time to develop or market manufacturing cost,
the new products, range of products, quality cost, cost of
machine change over time, time to activities (ABC rationale),
change schedule, responsiveness, lead cost reduction, labour
time for new product development, productivity, space
anticipating future changes index, new productivity, inventory-
market and technology index, volume related measures (stock
flexibility, product mix flexibility, turnover, inventory
release material JIT turnover, inventory
turnover weighted by
zz Dependability – delivery on due date industry)
(ship on time), percentage of orders
delivered late, average lateness of zz Other – ROI, growth of
orders, schedule adherence, quoted market share, growth of
customer lead time, JIT delivery from sales, profit margin on
suppliers, customer query, JIT delivery sales, EBIT/sales, earning
to customers per share, current ratio,
profit after interests and
tax, percentage of sales for
new products, net profit,
ROA, ROE, break-even
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Domain Non-Financial Indicators Financial Indicators

of Use
zz Speed – Order entry to shipment,
frequency of delivery, cycle time,
throughput time, manufacturing cycle
time reduction, lead time, average
customer lead time
zz Other – Customer satisfaction, retention
of employees, quality of professional
development, quality of leadership
development, health and safety,
employees’ perception survey index,
OEE (Overall Equipment Efficiency),
process capability index, depth of
strategic planning
As part of zz Flexibility – response time variability, zz Cost – conversion cost,
VSM batch size, transfer lot size value stream cost, in-
zz Speed – set-up time, processing time, process inventory
moving time, takt time, delivery speed zz Other – revenue, value
IT zz Other – daily production per terminal,
productive capacity, non- productive
capacity, available capacity, production
output per man, manpower
stream gross profit, value
stream ROS
Source: https://www.rug.nl/research/portal/files/76564075/Performance_management_practices_in_lean_
manufacturing_organizations_a_systematic_review_of_research_evidence.pdf
2.3.3 LEAN AND ASSET MANAGEMENT

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Manufacturers today are expected to be more agile and lean to handle fluctuating
demand, manage piled-up inventories when orders are scarce and still remain
profitable. This requires them to shift from creating the capacity to increasing
Return on Assets (ROA) and reduce costs to remain competitive. This new focus
on waste elimination from operations and improvement in cycle times and process
capabilities has compelled manufacturers to adopt lean management systems. To
improve ROA, manufacturers must generate more revenues from the same or
smaller asset base at a lower cost. To reduce costs, the lean management system
recommends the following:
Reducing input for a given output: Inputs can be reduced by managing
people which involves improving labour utilisation and productivity.
Risks of losing the know-how due to attrition and ageing should also be
managed. Inputs can also be reduced by doing selective investment for
underperforming assets, increasing run-time for equipment and restraining
from making investment in new capital equipment.
Increasing output for a given input: Output can be increased by undertaking
predictive and preventive plant maintenance. This helps improve asset
utilisation by enhancing uptime and asset availability. Output can also
be increased by optimising processes and reducing sub-optimal process
operations.
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Lean Management
Usually, organisations possess a great deal of strategic assets which are

interdependent and exist as a single system. This system is managed by the
higher management of the organisation using the Enterprise Asset Management
process. Organisational assets may be fixed, physical or capital in nature. Lean
has a positive impact on asset performance which, in turn, helps in successfully
achieving the organisational objectives. The lean management aspect of the
asset management ensures that the maximum asset performance can be derived
by incurring least expenses. Asset management also takes into account factors
such as risk, safety, compliances and the limited amount of resources. Also, the
maintenance department of organisation is responsible for proper functioning of
all assets. The strategic asset management helps in improving asset reliability.
Therefore, the maintenance department and strategic asset management help in
achieving the asset performance that is critical for lean implementation.
2.3.4 LEAN AND RISK MANAGEMENT

The risk management program of an organisation should have a system for
planning, organising, leading and controlling resources and activities to protect
them from adverse impacts. The lean risk management program requires
teamwork for efficiently and effectively evaluating and controlling the risks. Lean
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also ensures that the losses or missed opportunities do not prevent the organisation
from accomplishing its strategic goals. Lean risk management program requires
active participation and support from the top leadership.
11. Under lean management, an organisation focusses on measuring

S elf outcomes, outputs, inputs, efficiency and customer satisfaction. (True/
A ssessment False)
Q uestions
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2.4 LEAN PRODUCTION AND POWER OF LEAN PRODUCTION
Lean production is an organised manufacturing method that continuously
removes waste and improves processes within a manufacturing system. It levels
and reduces the workloads to increase value for the customers and become cost-
effective. Lean production focuses on identifying the activities or processes that
add value and reducing non-value adding activities. It uses a limited amount of
resources to produce more and reduce wastes. Lean production is about reducing
three types of wastes, including material waste, labour waste and time waste. Once
all these wastes are removed from the system, the lean manufacturing system starts
to develop. Lean is also about increasing the efficiency and quality of production.
This requires the development of a lean culture in the organisation.
The concept of lean production was introduced in the book ‘The Machine that
Changed the World’ which was published in 1990. In the book, the authors
Womack, et al. labelled the TPS as a lean production system. A lean production
system focuses on tools such as JIT, 5S, Cells and Kanban. TPS, on the other hand,
is a sophisticated production system where all the components contribute to a
whole. It focuses on supporting and encouraging people to continuously improve
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the processes they are working on. Therefore, people constitute the centre of the
TPS house. Figure 7 presents the TPS House:
Best Quality - Lowest Cost - Shortest Lead Time

Best Safety - High Morale
through shortening the production flow by eliminating waste
Just-In-Time People & Teamwork Jidoka
right part, right • Selection (In-station Quality
amount, right • Common Goals make problems
• Right Decision Making
time visible)
• Cross-trained • Automatic Stops
• Taki Time Planning
• Andon
• Continuous Flow Continuous Improvement
• Pull System • Person-machine
• Quick Changeover Separation
• Integrated Logistics Waste Reduction • Error Proofing
• Genchi Genbutsu
• In-Station Quality
• 5 Why’s
control
• Eyes for Waste
• Problem Solving • Solve Root Cause of
Problems (5 Why’s)
Leveled Production (Heijunk)
Stable and Standardized processes
Visual Management
Toyota Way Philosophy
IT Figure 7: TPS House
Source: https://www.researchgate.net/figure/TPS-house-LIKER-2003_fig5_283264468
The Toyota Way is a mindset that explains how people’s thoughts and actions
affect their daily interactions. It is an organisational culture that is based on two
principles namely continuous improvement (Kaizen) and respect for people.
Kaizen philosophy suggests that an organisation must establish a long-term vision,
meet challenges with mettle and originality to realise dreams. An organisation
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must continuously improve business operations and always try to innovate and
evolve. An organisation should believe in going to the source to determine the facts
and make correct decisions, building consensus and efficiently achieving goals
(Genchi/Genbutsu). People must respect each other and try to understand each
other’s viewpoints, take responsibility and establish mutual trust. The leaders must
stimulate personal and professional growth of their employees, share development
opportunities and maximise individual and team performance. Lean production is
established on the basis of the Toyota Way. The Toyota Way is shown in Figure 8:
The Toyota Way
Continuous Respect for

Improvement people
Challenge
Respect
Kaizen
Teamwork
Genchi Genbutsu*
*Japanese term for ‘go and see for yourself’
Figure 8: The Toyota Way
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Lean Management
2.4.1 LEAN MANAGEMENT IN LEAN PRODUCTION

According to Jeffrey Liker, lean management in lean production is based on the
14 management principles of the Toyota Way, which can further be divided into the 4P
model. The 4P model is comprised of philosophy, process, people and problem-
solving. Let us understand these 14 principles as follows:
1. Philosophy: This is the foundation principle for all the other principles,
which states the following:
zz Principle 1— The management should make decisions based on a long-
term philosophy, even at the expense of short-term financial losses.
What does it mean?
99 The management should have a philosophical sense of purpose that
overrides any short-term interests. They should develop and align
the organisation toward a common direction and purpose, which
is much more than just profiteering. They should understand their
place in the organisation’s history and work to grow to the next level.
99 The management should make decisions to create value for the
customers, society and the economy. They should assess each
99
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function in the organisation in terms of its ability to generate value.
The management should be responsible for their decisions and
improve their ability to create value.
2. Process: The right process will generate the right results. This P is made up
of 7 principles which are as follows:
zz Principle 2— Create a continuous work process flow to highlight
problems immediately.
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What does it mean?
99 Re-engineer work processes to accomplish high value-added,
continuous flow. Reduce and eliminate the idle or waiting time in
work processes.
99 Create flow to transfer material and information efficiently and to
link processes and people together so that problems can be instantly
highlighted.
99 Make the flow a part of the organisation’s culture so that people
strive to improve their work processes continuously.
zz Principle 3— Use the pull systems to avoid overproduction.
What does it mean?
99 Provide customers with what they require at the right time and in the
right amount.
99 Minimise WIP and inventory by stocking small amounts of each
product based on JIT movement.
99 Adapt changes in the daily shifts to capture a customer’s demand.
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zz Principle 4— Level the workload (Heijunka).

What does it mean?
99 Remove overburden on people and equipment. Eliminate unevenness
in the production schedule.
99 Level out the workload of all processes.
zz Principle 5— Develop a culture where the staff is empowered to stop the
process and fix issues if detected. This will enable the manufacturer to
get the right quality at the very first time.
What does it mean?
99 Use all the latest quality assurance methods to ensure quality in
products or services.
99 Build the ability of Jidoka in the equipment so that they stop by
themselves if they detect a problem.
99 Develop a visual system to alert teams when problems occur.
99 Develop support systems within the organisation to solve problems.
Implement counter-measures against potential issues.
IT 99
99 Embed and propagate among the staff the philosophy of stopping

or slowing down to get quality at the very first time. Make this
philosophy a part of the organisation’s culture.
zz Principle 6— Deploy standardised processes to establish continuous
improvement and employee empowerment.
What does it mean?
99 Use even, repeatable methods to maintain the expectedness, regular
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timing and regular results of processes.
99 Standardise the best practices and capture their learning. Use the
learning into the new standard to enable easy handovers.
zz Principle 7— Use visual controls so that problems are instantly
highlighted.
What does it mean?
99 Use visual indicators to immediately discern whether conditions are
standardised or there are deviations.
99 Design to place simple visual indicators in the plant floor to support
flow and pull.
99 Make a simple 1-page report to handle critical financial decisions.
zz Principle 8— Use only trusted, tested technology that serves your
processes and people.
What does it mean?
99 Use technology to support people and not to replace them. Work out
a process manually before adding technology to support it.
99 Use proven technology that is reliable and can be standardised.
99 Test all technologies before adopting them.
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Lean Management
99 Reject or change technologies that are against the organisation’s

culture or might interrupt stability, reliability and predictability.
99 Encourage people to consider new technologies and develop new
approaches to work.
99 Quickly implement a tested technology if it can improve work
processes.
3. People: Develop each individual so that they can add value to your
organisation. This P is made up of 3 principles which are as follows:
zz Principle 9— Develop leaders who understand the work, live the
philosophy, and teach others.
What does it mean?
99 Groom leaders from within the organisation.
99 Select leaders who can be the role models of the organisation’s
philosophy and way of doing business.
99 Choose leaders who understand the daily work so that they can be
effective teachers and coaches of an organisation’s philosophy.
zz

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Principle 10— Develop excellent people and teams who follow the
organisation’s philosophy.
What does it mean?
99 Develop a strong, stable culture where an organisation’s values are
shared and followed.
99 Train brilliant individuals and teams to work within the organisation’s
philosophy to achieve outstanding results.
Reinforce the culture continuously.
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99
99 Use cross-functional teams to enhance quality, productivity and flow.

99 Foster teamwork and team sprit towards the achievement of common
goals.
zz Principle 11— Respect the over-reaching network of partners and
suppliers. Challenge them to grow and help them improve.
What does it mean?
99 Respect partners and suppliers as they are critical for any business.
99 Challenge them to grow and develop.
99 Support them to achieve their challenging targets.
4. Problem-solving: Solve root causes continuously to drive organisational
learning. This P is made up of 3 principles which are as follows:
zz Principle 12— Figure out the situation by yourself (Genchi Genbutsu).
What does it mean?
99 Go to the source of a problem and personally observe and verify data.
This will help the team leader to have a thorough understanding of
the situation.
99 Make decisions based on the personally verified data and observations.
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zz Principle 13— Make decisions slowly by consensus after evaluating all

options. Then, implement the decisions quickly.
What does it mean?
99 Consider all the alternatives before making a decision.
99 Discuss problems and potential solutions with all the impacted
stakeholders (Nemawashi). Gather their viewpoints and get a
consensus on the next step. Although it is a time-consuming process,
it will widen the search for solutions. Moreover, when a decision is
made, it will be quickly implemented as it already has the support of
all the parties.
zz Principle 14— Become a learning organisation by relentless reflection
(Hansei) and continuous improvement (Kaizen).
What does it mean?
99 After standardising a process, use continuous improvement to
identify the root cause of the problem and apply appropriate counter
measures.
99 Ensure that processes have no inventory. This will help the team
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leader in detecting waste. Once waste is spotted, get employees to
use a continuous improvement process to remove it.
Develop stable teams. Focus on slow promotion. Deploy careful
succession systems. All these steps will enable the team leader to
protect the organisational knowledge.
99 After completing a project, revise the key milestones (hansei) and
identify the lessons learned. Create counter-measures to prevent
such shortcomings from recurring.
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99 Standardise the best practices, instead of reinventing the wheel with
each new project and/or project manager.
12. The Toyota Production System was developed by _________.

S elf 13. The lean management in lean production is founded on the 4Ps. Which
A ssessment P is not among them?
Q uestions
a. Process b. Protocol
c. People d. Problem
14. Which principle will ensure the appropriateness of the process used in
lean production?
a. Develop leaders who understand the work and live the philosophy.
b. Thoroughly understand the problem yourself.
c. Make decisions slowly by consensus.
d. Use visual controls to instantly identify problems.
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Lean Management
2.5 MASS PRODUCTION CONCEPT

The manufacturing of standardised, replaceable goods in large amount is called
mass production. The concept was popularised in 1913 when Henry Ford created
a modern, integrated mass production operation using a conveyor belt in the
assembly of flywheel magnetos. When the assembly time of magnetos reduced
from 18 minutes to 5 minutes, Henry Ford applied this concept to automobiles.
The design of mass production line was thoroughly analytical and aimed to do the
following:
Divide tasks optimally among work stations
Optimise the speed of work at each station
Optimise the height of workbenches at each station so that they are neither
too high nor too low
Synchronise simultaneous operations
The mass production became popular quickly as it was much more efficient than
craft production. Some of the efficiencies of mass production are as follows:

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Division of operation into specialised tasks: In mass production, the total
production operation is divided into specialised tasks. Each specialised task
has simple, repetitive motion patterns and minimal handling or positioning
of the workpiece. This creates a pattern in human motions, which can be
easily learned and quickly replicated with minimal effort.
Simplification and standardisation of parts: The components/parts are
simple and standardised. This allows all the parts to easily fit to other parts
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without adjustment.
Development and use of specialised machines, materials and processes:
Due to these specialised machines, materials and processes, minimal human
effort is needed. It generates maximum output per unit of capital investment,
produces fewer inconsistent products and reduces raw material costs.
Balance between human and machine: Due to the systematic engineering
and planning of the production process, the human effort and machine
effort are balanced. Labour is effectively divided into specialised skills. The
production system is integrated to optimise productivity and minimise costs.
Examples of mass production can be seen in various industries such as automobile
industry, oil industry, paper industry, lumbar industry or electronics industry. Let
us now discuss the advantages and disadvantages of mass production.
Advantages of mass production are as follows:

High accuracy and automation: Mass production manufactures a large
quantity of standardised goods. It has a high accuracy level, although
continuous supervision is necessary. This is due to setting up of assembly
line so that only an input of a fixed size and precision can be accepted by
machines. Thus, mass production also involves a great degree of automation.
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Reduced labour costs: Due to high level of automation and division of labour,
workers focus on their jobs individually, which increase the reliability of
work. The mass hiring of labour also reduces costs.
High rate of production: High automation in mass production is due to the
use of machines that run on electricity. This increases the rate of production.
Goods are produced efficiently at greater speed and marketed faster. This
leads to generate more profits in less time.
Low cost per unit: Use of automated tools, high rate of production, efficient
use of equipment, batch production and mass procurement lead to the lower
costs per unit.
Disadvantages of mass production are as follows:
High initial costs: It is quite expensive to set-up assembly/production lines.
Repetitive work: Due to highly repetitive work, the employees may not be
motivated.
Wasted resources: The entire production cycle is vulnerable due to wrong
product design. If anything goes wrong in product design, the entire
production cycle will suffer. Moreover, it is impossible to verify wrong
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design until production has started, which is leading to wastage of resources.
Low variety: Mass production fails if the consumers want more variety
and specialised products. It produces all the items of the same quality and
dimensions. This may limit consumption of the product. If there is less
demand for the product, then it may also lead to wastage and loss.
Equipment and production line breakdown: Even if a single equipment
used in the production process or any part of the assembly line breaks-down,
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then, the entire production line has to be halted. Moreover, if equipment is
malfunctioning, then it leads to the production of defective products.
Mass production is characterised by introducing some kind of mechanisation or
automation to retain quality and achieve a high success rate. Manufacturers need
to think carefully how they can use mass production so that costs are minimised,
wastes are eliminated, and maximum benefits can be gained.
2.5.1 MASS PRODUCTION VS. LEAN PRODUCTION VS. CRAFT

PRODUCTION
Mass production produces items on a mass scale (push production), whereas lean
production produces items based on customer demand (pull production). Table 2
compares mass production with lean production and craft production:
Table 2: Mass Production vs. Lean Production vs. Craft Production
Mass production Lean production Craft production
Focuses on manufacturing the Focuses on producing items Focusses on very low volume
products in large-sized lots. It in small continuous batches, production that is done by
aims to produce the maximum as per the latest market highly skilled employees.
number of products in a single demand and/or against the
lot. customers’ order.
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Lean Management
Mass production Lean production Craft production

Keeps large inventories of Keeps minimal or zero Keeps low levels of inventory.
manufactured products, which inventory. Manufactured
are distributed to market items are generally supplied
intermediaries, who then supply directly to the customer.
them to retailers.
Production planning depends Production planning is No formal planning is done
on various complex factors, such easier, as it is based on for craft production.
as market price, competition, market demand.
inventory levels, time for
distribution, extra production
due to advertisement, etc.
This type of complex planning
requires enterprise-level tools.
Differentiates between the Closely inter-linked with Craft production takes much
manufacturing cycle and the the manufacturing cycle and more time than mass and lean
sales cycles. the sales cycles which are production due to which cycle
ultimately based on the latest time also increases.
demand figures.
Push process (push the Pull process (allow customers Craft producers make and sell
manufactured products to the to pull the products based on (push) using concepts such
market). their demands). as exhibitions and they also
receive exclusive orders which
Supply-oriented.
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Generates considerable waste.
Demand-oriented.
Minimises or eliminates
constitute pull.
Usually demand-oriented.
Level of waste differs in
waste. different craft industries but
usually remains low due to
low volume of production.
Requires heavy machinery Requires compact and Requires general-purpose
which generally works in 3 movable machinery which machines.
shifts. can be easily set up.
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Scheduled based on market Scheduled based on customer No formal method of
forecast (push). orders (pull). scheduling production.
Longer lead time. Shorter lead time. Longest lead time.
Craft production was the first type of production system followed by mass
production. Thereafter, mass production was replaced by lean production system.
Before mass production was popularised by Henry Ford in the early 19th Century,
craft manufacturing used to dominate the factory production. In this process,
skilled craftsmen used to manufacture a variety of goods but in low amounts to
meet the requirements of individual customers. Their skills were transferred
through apprentices and journeymen. They mostly worked from home or in small
workshops. This type of craft production worked well for small industries involving
considerable skills, such as furniture manufacturing, clock-makers and jewellers.
When Henry Ford and Toyota adopted the concept of mass production, industries
switched over to the mass production to produce standardised goods at a lower
cost and in large amounts. These goods had low variety. Customers did not
have a choice over the specifications of the product and had to buy what was
supplied. Manufacturers focussed on keeping costs low by minimising variation
of components and products and setting up large factories. They developed
aggressive marketing tactics to ensure mass consumption of goods produced
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in a large scale to generate healthy profits. Mass production was made possible
through three significant innovations in operations which are as follows:
System of standardisation and replaceable parts: The system of
standardisation and replaceable parts was called the ‘American system of
manufacture’. It spread from the US to the UK and other countries. Rather
than being produced for a particular machine or equipment, these parts
were made of a standard design that could be used in different models. This
significantly lowered the effort of operators in cutting, filing, and fitting
individual parts. This also helped workers in getting specialised skills in
particular parts of the production process.
System of scientific management: This system was developed by Frederick
Taylor. He suggested that it was the management’s responsibility to evaluate
jobs to find the best way of performing a task rather than letting workers
figure out by themselves how to perform their jobs. He suggested that by
dividing tasks into a logical sequence, each worker would be able to perform
the tasks efficiently and cost-effectively.
Moving assembly line: Before Henry Ford developed the moving assembly
line, workers used to bring all the parts and tools to a fixed location where one
car used to be assembled at a time. The moving assembly line revolutionised
IT their way of working and speeded up the task by bringing the cars to the
workers. In this way, Ford extended the idea of scientific management
where the assembly line controlled the speed of production. This developed
a system where large volumes of standardised products could be assembled
efficiently and cost-effectively. Moreover, there was no requirement for
workers to be highly skilled. Relatively unskilled workers could be hired to
fit parts in the assembly line.
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15. Who is credited, with introducing the mass production concept?
S elf a. Ohno b. Toyoda
A ssessment
Q uestions c. Edison d. Ford
16. Which feature does not apply to mass production?
a. High accuracy b. High variety
c. Resource saving d. Reduced labour costs
17. Lean production focusses on producing large-sized lots. (True/False)
18. Mass production is __________ production depending on forecasts,
whereas lean production is ________ production depending on
customer’s demand.
19. Which type of production will produce the highest variety of products
for individual customers?
a. Craft production b. Mass production
c. Lean production d. Push production
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Lean Management
2.6 SUMMARY
Lean management is a long-term approach to run a business while continually
improving its processes. It aims to remove the wastes related to time, effort or
money. Lean management tries to satisfy each customer. Lean management requires
that the team leader sets clear goals, builds a lean mindset within the team, take
small steps and find a change agent to introduce lean culture in the organisation.
Lean metrics include WIP, queues, blockers, lead time, cycle time, throughput and
process cycle efficiency. Lean management benefits the organisations in terms of
cost-efficiency, better customer relations, use of push and pull, improved quality,
improved culture and enhanced morale.
The House of Lean has a foundation base (stability), walls or pillars (basic
principles, methods, and tools), and roof (internal and external goals). The two
pillars of the House of Lean are JIT and Jidoka. There are five foundation stones
of the lean management system which include Process management excellence,
Project management excellence, Change management excellence, Knowledge
management excellence and Resource management excellence. Lean production
is an organised manufacturing method is used for removing the waste within
IT
a manufacturing system. It considers the waste generated from inconsistent
workloads and overburden and then reduces them to increase value for the
customer and reduce costs for the manufacturer. Lean management in lean
production is based on Liker’s 14 principles that are categorised into the 4P model
(philosophy, process, people, and problem-solving). Mass Production is the
production of standardised, replaceable goods in large quantity.
2.7 KEY WORDS

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Pull system of production: Producing goods after receiving order from
customers.
Levelling: Reduced variation in the throughput.
5S: Lean technique to organise the work area that comprises Seiri (sort out),
Seiton (organise), Seiso (shine), Seiketsu (standardise) and Shitsuke (self-
discipline).
Heijunka (Level Scheduling): A type of production scheduling that
manufactures items in smaller batches by mixing product variants within
the same process.
Kanban: A pull system that controls the flow of goods within the factory and
outside to retailers and suppliers. It is based on automatic replenishment
that signals when more stock is needed.
PDCA: The iterative method of Plan-Do-Check-Act for implementing
improvements.
Poka-Yoke: A lean technique of designing error detection and prevention in
the production processes to achieve zero defects.
Root Cause Analysis (RCA): A method of evaluating the underlying cause
of a problem and addressing it.
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2.8 CASE STUDY: LEAN IMPLEMENTATION IN HEALTHCARE

School of Dental Medicine (SODM), Case Western Reserve University is based
on Cleveland, Ohio, US. Every year, the school enrolls about 70 students who
participate in a four-year intensive academic program to get the dental doctoral
DMD degree.
The school has about 75 simulation operatories where first- and second-year
students learn clinical procedures on mannequins and 143 real operatories where
the third- and fourth-year students treat more than 8000 patients every year. This
way, it provides students integrated academic learning with patient care. The
tuition fee paid by the students is the main source of revenue for the DMD clinic.
DMD clinic also charges a discounted fee for dental treatments from its patients.
All the dental schools in the US need to follow the standards published by the
Commission of Dental Accreditation (CODA). Although these standards do not
directly relate to Lean strategies, they do contain a statement that includes the
responsibility to implement the following:
Continuous quality improvement at all levels
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Quality assurance systems with the PDCA cycle
Evaluation and application of new technologies
Implementation of a New Technology

A key instrument in dental treatment is the handpiece, which was introduced
in the 19th Century. Today, the handpiece is available in both electrical and air-
driven varieties. Electrical handpieces are superior to air-driven ones because of
the following reasons:
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They have a control system that maintains speed as the load on the dental
bur increases
They have a higher torque with minimum stalling
They have reduced noise levels and vibration levels
They have increased cutting precision and efficiency
They are flexible to use in a variety of ways using the same motor and control
box
Their inherent design has the potential to reduce contamination by generating
fewer aerosols and allowing less bacterial colonisation
In 2005, the SODM decided to implement electrical handpieces for all students in the
academy due to its benefits. At the same time, the institution decided to retain the
traditional air-driven handpieces so that students learn the proficiency in handling
both types of handpieces. During the first three years of the implementation of the
electrical handpiece, the students regularly provided feedback on various aspects
of the device. They also complained that the control box for operating the electrical
handpiece was non-detachable from the operatory and thus occupied a large part
of the operatory tray.
64
Lean Management
An Operatory Tray with Control Box (Silver Cassette contains Sterilised Instruments for
Operative Procedures)
The SODM then decided to address the issue quickly. For this, the school launched
a survey among the students on how to improve the current situation. The survey
results revealed that the situation could be improved by 5S and quick changeover
tools of lean. With reference to lean theory, SODM focussed on the development
of sustainable and clinical environment for implementing the new technology
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of electrical handpieces, addressing the complaints and concerns of the students
when they occur and execute the process with minimum funds.
After applying the 5S technology, the SODM realised that instead of implementing
the electrical handpieces technology for all students, it should be implemented for
all operatories to generate the following outcomes:
Remove items from the work area (which was the bulky control box on the
unit tray).
Create a situation where students could experience the same setting in the
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preclinical mannequin area and the main patient clinic.
Remove the process of connecting and disconnecting the control boxes,
which needed to be transported and stored during times when students
were not in the operatory.
Process
The SODM started the process by screening the electrical handpieces of all the
selling organisations. Having several iterations with the suppliers, a new vendor
proposed the following solution:
Integrate control boxes: The vendor would integrate the control boxes in all
the operatories in the preclinical and clinical areas of the dental unit. This
would enable the handpieces to be quickly connected without the need to
constantly connect, disconnect and store the handpiece when not in use.
Supply adaptors: The vendor would provide adapters to the SODM so that
the previously purchased handpieces could be used.
Financial provision: The vendor would bear the cost for creating the new
setting. This provided the cost-effective solution to the SODM.
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Operator Tray with Integrated Control Box
Results
After the implementation of the above-mentioned offerings, SODM realised that
the students are much more satisfied with the handpiece. The feedback of the
students mentioned that this electrical handpiece takes less set-up time, needs no
extra space on the unit tray, has less requirement of wear and tear, does not need
to be installed repeatedly and does not need much technical support.
Source: Teich & Faddoul, 2019
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QUESTIONS
1. Which lean tools did solve the problem of the dental school?
(Hint: 5S, quick changeover, etc.)
2. Why were the students more satisfied with the new electrical handpiece?
(Hint: Difference in old and new electrical handpiece.)
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1. Which organisation introduced lean management?
Exam Check
a. Ford b. Toyota
c. Mitsubishi d. General Motors
2. What is the production process called when products are delivered based on
the need of the customers?
a. Pull b. Value
c. Flow d. Perfection
3. Which lean tool is used for mapping value stream?
a. 5S b. Kanban
c. Poka-Yoke d. Jidoka
4. The PDCA process primarily helps in _________.
a. Creating flow b. Mapping value stream
c. Establishing pull d. Pursuing perfection
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Lean Management
5. If a work item waits between two processes in manufacturing, then it is

called ___________.
a. Queue b. Work in process
c. Work in progress d. Lead time
6. Which lean metrics does not help in improving lean production?
a. Long cycle time b. Large throughput
c. Zero queues d. Minimum blockers
7. Which of the following is the foundation base of the house of lean?
a. Built-in quality b. Flow and Pull
c. Process stability d. Lowest cost
8. JIT is ____ of the House of Lean.
a. the base b. a door
c. a pillar d. the roof
9. Which lean tool is used for production levelling?
a. Kaizen
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c. Heijunka
b. Kanban
d. Jidoka
10. A Kanban board usually presents the value streaming of a task is done in
three stages. Which of the following is not a part of that stage.
a. Done b. In Progress
c. Requested d. Deployed
11. What is the way to sustain the Kaizen gains?
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a. JIT b. Standardisation
c. Process improvement d. Six Sigma
12. The emergency procedures in case of a fire in a building represent which
lean technique?
a. Visual management b. Value stream mapping
c. Emergency drill d. Standardisation
13. The output for a given input can be increased by:
a. People management
b. Predictive and preventive plant maintenance
c. Plant control
d. Plant planning
14. Which of the following statements applies to lean management?
a. The management should focus on immediate short gains instead of
wasting time and effort on long-term realisation.
b. The flow must be intermittent to highlight problems instantly.
67
c. The work must be stopped immediately to fix issues when detected.

d. Prioritise external talent when it comes to choosing leaders.
15. The specialisation of tasks and standardisation of parts is an aspect of
__________ production.
16. The total time taken by a work item to move through the value stream is
called ________.
17. The maximum throughput is ___________ of the process.
18. ____________ demonstrates how changes made to the system’s input can
impact its output.
19. __________ involves analysing a problem and asking why it has happened
until the root cause of the problem is identified.
20. Most advanced and acclaimed organisations are able to complete 10% of
their projects within 90% of their budget and schedule. (True/False)
21. Preventive plant maintenance helps improve asset utilisation by enhancing
uptime and asset availability. (True/False)
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22. Mass production is demand-oriented. (True/False)
23. Overproduction must be avoided using pull systems. (True/False)
24. According to Little’s Law, cycle time = work in progress inventory in
units/_________.
25. Which of the following is not the focus of lean management?
a. Quality b. Cost-effectiveness
c. Deliverability on time d. Push in production
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1. Aryan & Co. wants to optimise the quality of its products. Which lean tool
will help them do so?
a. Poka-Yoke b. Andon
c. Heijunka d. Kanban
2. Girish and his team members have a target of producing 300 goods in a shift
to satisfy the requirements of its customers. If the shift timings were 3,000
seconds, then the Takt Time will be ______.
a. 15 seconds b. 10 seconds
c. 100 seconds d. 50 seconds
3. If a team has to make 1,000 bottles and the flow time is 10 days, then the cycle
time will be _____ days.
a. 0.100 b. 0.10
c. 0.001 d. 0.01
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Lean Management
4. Shantanu is a team leader working in Ashiana & Co. He usually makes

decisions slowly after evaluating all the options, and then implements
his decisions quickly. Which principle is he following from out of the 14
principles of lean management?
a. Principle 1 b. Principle 3
c. Principle 13 d. Principle 14
2.11 ANSWER KEY
A. SELF ASSESSMENT QUESTIONS

Topic Q. No. Answer
Lean Management 1. b. Value stream
2. never-ending
3. True
4. d. Map value stream
5. True
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House of Lean Management
6.
7.
8.
c. Work in Progress
Blockers
c. People and Purpose
9. walls
10. False
Lean Management System 11. False
Lean Production and Power of Lean 12. Taiichi Ohno
Production
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13. b. Protocol
14. d. Use visual controls to instantly
identify problems.
Mass Production Concept 15. d. Ford
16. c. Resource saving
17. False
18. push; pull
19. a. Craft production

Q. No. Answer
1. b. Toyota
2. a. Pull
3. b. Kanban
4. d. Pursue perfection
5. a. Queue
6. a. Long cycle time
7. c. Process stability
8. c. a pillar
9. c. Heijunka
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Q. No. Answer
10. d. Deployed
11. b. Standardisation
12. a. Visual management
13. b. Predictive and preventive plant maintenance
14. c. The work must be stopped immediately to fix issues when detected.
15. Mass
16. Lead time
17. capacity
18. Little’s Law
19. 5 Whys
20. False
21. True
22. False
23. True
24. Average completion rate
25. Push in production
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Q. No. Answer
1. a. Poka-Yoke
2. b. 10 seconds
3. c. 0.001 days
4. c. Principle 13
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@ SUGGESTED BOOKS
A Beginner’s Guide to Lean: Standardized Work — The Linchpin of Lean |
Association for Manufacturing Excellence. (2019). Retrieved 19 July 2019,
from https://www.ame.org/target/articles/2013/beginners-guide-lean-
standardized-work-%E2%80%94-linchpin-lean
Mann, D. (2010). Creating a Lean Culture. New York: Productivity Press.
E-REFERENCES
mass production | Description, History, Uses, & Limitations. (2019).
Retrieved 20 July 2019, from https://www.britannica.com/technology/mass-
production
Lean Metrics | Six Sigma Study Guide. (2019). Retrieved 20 July 2019, from
https://sixsigmastudyguide.com/lean-metrics/
House of Lean. (2019). Retrieved 20 July 2019, from https://www.
graphicproducts.com/articles/house-of-lean/
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CHAPTER
3
LEAN MANAGEMENT CONCEPTS
Table of Contents
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Chapter Objectives
Introduction
Learning Outcomes
3.1 Philosophy of Traditional Operation and Lean Operation
3.2 Concepts Used in Lean Management
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3.2.1 Waste
3.2.2 Kaizen
3.2.3 The 5Ms
3.2.4 Repetitive Flow
3.2.5 Point of Use Storage (POUS)
3.2.6 Pull and Push Systems
3.2.7 Value-added Actions
3.2.8 No Value-added Actions
3.2.9 Business Value-added Action
3.2.10 Value Stream Management
3.2.11 Quality at the Source (QATS)
3.2.12 Just-in-Time (JIT)
3.2.13 Process Input Variables
3.2.14 Process Output Variables
3.3 Summary
3.4 Key Words
Table of Contents
3.5 Case Study
3.8 Answer Key
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Lean Management Concepts
 Differentiate between the traditional operation and lean operation

 Describe the concepts of lean management, including waste, Kaizen, the 5Ms,
repetitive flow, Point of Use Storage (POUS), pull and push system, etc.
INTRODUCTION
Read In the previous chapter, you studied about lean management, including the nature
Pre-read Connect of the lean management, lean metrics and the benefits of lean management. Next,
the chapter discusses the house of lean management and the lean management
system. Further, you will also get an insight into the lean production and the
power of lean production. The mass production concept had been described at the
end of the chapter.
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Lean management seeks to implement effective business processes for running the
business. Lean management helps in reducing waste and maximising value for
the customers at the same time. Also, it helps in decreasing the costs, reducing the
processing time and developing the high morale of the workers. This philosophy
of eliminating waste from the organisational processes is at the core of lean
management. The process of lean management contains various forms of proven
tools and techniques which effectively focus on minimising the activities leading
to waste and adding value to the output for meeting the needs of customers.
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The modern concept of lean management was introduced in the 1930s by Eiji
Toyoda and others at Toyota. The concept of lean management system was
developed after the invention of the Toyota Production System (TPS). They
realised the need for lean management because their warehouses were piled up
with products which had no buyers and it resulted in wastage. It was necessary to
make effective production targets on the actual sales and this made more financial
sense. This form of production was called Just-In-Time (JIT).
Lean management can help organisations by eliminating significant amounts

of wastage and improving their systems. Lean manufacturing helps in dealing
with problems related to scheduling, line balancing and poor production. Lean
management is well suited for the organisations which do not have an effective
system of allocation of production, material requirement planning or ERP systems
in place.
In this chapter, you will study about the basic differences between traditional
operations and lean operations. In addition, you will also get to know about the
several lean concepts and techniques, such as waste, Kaizen, 5Ms, repetitive flow,
pull and push systems, value stream management, etc.
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LEARNING OUTCOMES
Predict whether an organisation is using traditional operations or lean
operations just by examining its processes
Validate the applicability of different lean concepts with respect to any
particular process of any organisation
3.1 PHILOSOPHY OF TRADITIONAL OPERATION AND LEAN OPERATION

The lean manufacturing methods are different from the traditional processes in
a number of ways. In the traditional operations, mostly high levels of inventory
are maintained for fulfilling large order quantities and to ensure high capacity
utilisation. In the lean systems, the management questions the excessive amount
of inventory and defines it as waste and develops ways for improving the systems
and processes.
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Changing from the traditional method to the lean method is not an easy task,
and it involves resistance with a number of organisational cultural issues and
other problems. It is necessary to look at the lean methods of management as
being beneficial to organisations and can have an effective advantage in terms
of productivity, cost and quality of products over the traditional method of
operations.
Some of the important points of differences between the traditional methods of

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operations and the lean methods of operations are as follows:
Functional layouts are used in traditional manufacturing operations, whereas
cellular layouts are used in lean manufacturing operation.
In traditional operation, the process of production is driven by a sales forecast
(push method), whereas in the lean operations, the production is done
according to the demand of the customer. In lean, goods are only produced
N ote when an order is placed.
The traditional Traditional operations focus on internal efficiency, whereas lean operations
approach process
emphasises on the focus on customer value.
use of equipment, During the traditional operations, the Work in Process (WIP) is seen as a
automation and
value-added normal part of operations. In lean manufacturing, the work in process (WIP)
processes, is considered as a waste.
whereas lean
approach In traditional operations, the organisation’s management is the main driver
advocates that of change. On the other hand, in lean philosophy, everyone gets trained in
maximum benefit the principles of lean and are encouraged to find methods for improving the
can be derived processes. Also, management plays a supportive role in Gemba wherein it
by reducing or
eliminating waste.
takes a tour of the production area, note down the problems and concerns of
employees and resolve them.
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In the traditional method of operations, when the process is working, it should

continue as it is and should not be changed, whereas in lean management,
one always looks for opportunities for improving the processes.
Traditional methods focus on inspection of products after they are
manufactured, whereas lean methods focus on prevention of any defects or
errors.
1. Changing from the traditional method to the lean method is not an easy
task, and it involves __________ with a number of organisational cultural
S elf issues and other problems.
A ssessment
Q uestions 2. Traditional methods look at the system as parts and processes.
(True/False)
3.2 CONCEPTS USED IN LEAN MANAGEMENT

Lean management involves eliminating wastes and optimising processes which
help in reducing the costs while delivering high-quality products to satisfy the
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needs of the customers, that they are willing to pay for. Under lean, the processes
are analysed to understand whether it is moving in the right direction. Extra steps
and processes that may be generating the waste are eliminated. Waste or Muda
involves things which do not add value to the end product.
These days, lean management systems have been adopted by different
organisations in the fields of healthcare, financial services, project management,
construction, government and knowledge management. Even today, there are
some people who believe that lean management cannot be used and standardised,
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and, hence, it cannot be repeated and replicated. But lean is applicable to most
of the organisations and the value system can be applied in various fields,
industries and organisations. Lean management has transformed the thinking of
the organisations by providing value-added services or products to the customers.
They have achieved high-quality products or services by using processes which
maximise the productivity of the workflow, and with the employees who are
occupied with continuous improvements of the systems within the organisations.
Lean management tools accelerate the process by maximising value towards their
customers along with reducing all forms of waste. The goal of lean management
is to improve the efficiency of an organisation by systematically bringing small
changes in processes with fewer resources and adding more value for the customer.
Lean management aims at continuous improvement by using lean management
concepts, such as Just-In-Time (JIT), along with the supplier management
procedures.
Let us study about some of the important concepts used in lean management.
3.2.1 WASTE
Waste is a substance which adds no value to any process in an organisation. Waste
includes unwanted production which is not fit for sale, misuse of resources or
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inventory, etc. Extra resources could be better utilised elsewhere in the organisation
STUDY HINT or can be invested in opportunities which create value. Lean manufacturing is
Waste is done with an objective of eliminating waste from the operations and processes,
considered an extra
and to increase productivity by using minimum input.
expense or effort.
It is made, but does
not help transform
To eliminate waste, the first step is to identify what is valuable, and what resources
the existing and activities are needed to create additional value. After the process of identifying,
raw materials except value-adding activities, anything else is considered as a waste. There are
into products or seven types of wastes or Muda which are as follows:
services for which a
customer is willing Overproduction
to pay.
Excess inventory
Over-processing
Defects or rework
Waiting
Unnecessary transportation
Unnecessary motion
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With advancement in the technology, these wastes can be eliminated or reduced
which lead to a competitive differentiation in the operations. It is important
for organisations to employ new methods of lean to curb the wastes, else the
competitors may exploit the emerging market opportunities.
3.2.2 KAIZEN
Kaizen is made from Japanese terms “kai” meaning change and “zen” meaning
good. This term means continuous improvement. It can also be used as a form of
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control and can be linked to various types of wastes. Lean emphasises the creation
of a pull system rather than a push system. The employees work for achieving
efficiency in the manufacturing process which is at the heart of operations,
using metrics for equipment utilisation, increasing productivity as much as
possible in lesser time to reduce individual unit cost. Use of effective and sensible
organisational control metrics can lead to improvement in production as well as
the supply chain.
Kaizen looks at improvement of the system. For achieving this, if the workers
encounter any abnormality in the machine or system, then they are expected to
stop their work and find a resolution or suggest an improved method to resolve the
abnormality. Kaizen involves all the employees of the company. Kaizen leads to a
gradual and systematic improvement in productivity. Kaizen consists of a number
of ideas for making the working environment effective by improving procedures,
team work, job satisfaction and creating a safer environment for people to work.
An organisation that practises kaizen, all the employees work together for the
profitability and the success of that organisation.
The main objective of Kaizen is to have people working together in an amicable

atmosphere. There are regular team meetings which involve discussions regarding
changes, projects, methods of improvements, etc. Some other objectives of kaizen
include elimination of waste, standardisation of work, JIT delivery, use of efficient
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equipment and quality control. The changes are made over a period of time which
can be small or big for creating an impact.
The basic requirements for Kaizen are as follows:

Teamwork
Quality control
Personal discipline
Improved morale
Suggestions for improvement
3.2.3 THE 5Ms

5Ms is a model of structured system analysis for management which helps
managers acquire and distribute the resources for achieving the business objectives.
Such manufacturing processes depend on 5Ms. The 5Ms are as follows:
Manpower: The deployment of manpower resources is important for the
system. They are hired to fit for various processes, trained for performance
and motivated to achieve excellence.

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Materials: These are the tangible inputs in terms of supplies of material for
the manufacturing of goods and intangible elements which form a part of
information and knowledge.
Machines: The machines, tools and equipment are needed for the production
of goods. These require both the tangible and intangible factors for the
processing and the effectiveness of machines and equipment.
Methods: In the manufacturing industry, the methods are required
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for completing the chain of activities and tasks for selling, designing,
manufacturing and delivering of goods and services. Apart from these,
methods are also required for developing systems to support the business
goals.
Money: Money is a critical aspect for the manufacturing industry. It includes
the activities, such as budget, finance, accounting, profit and loss, collections
and more. The business organisations depend on the money resources for
achieving their business objectives.
At times, these 5Ms are shown in the form of a fish diagram and these are
used to analyse each problem or method in the process of manufacturing. 5Ms
help determine the root cause of problems or other issues leading to levels of
inefficiency. The 5Ms have a direct influence on efficiency of manufacturing. Every
factor in the 5 Ms represents a function or a part of a function that contributes to
the bottom line of the process in operation.
Lean management strives to achieve efficient methods for managing resources,

waste-free operations, managing materials, energy and manpower. It does away
with keeping extra resources or stock of inventory in advance for the future orders.
The lead times are reduced by cutting down on costs and freeing the resources
which result in better productivity and quality of goods.
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Figure 1 depicts the 5Ms of lean:
Money
Achieved Business Objective

Manpower
Manager Methods
Materials
Machinery
Figure 1: 5Ms of Lean Manufacturing
3.2.4 REPETITIVE FLOW

The process of repetitive flow is also known as continuous flow manufacturing
or one-piece flow that is originated at the Toyota Production System (TPS). It is
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a part of the lean production system which has the objective of reducing waste
by bringing balance in the production line. The objective of the repetitive flow
is having a single part or unit of product move from process to process without
any bottlenecks or delays in between. It also aims to reduce the number of goods
that need to be produced at one time, and only produce goods for which there is
a demand. Producing a smaller number of goods and moving a product from one
process to another helps in producing goods much faster. This process integrates
the different processes together according to the JIT manufacturing approach. This
approach emphasises on producing only the number of goods that are required by
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the customers and delivering them on time. This will effectively bring down the
need to store extra inventory and leaving enough valuable storage space. Smaller
batches of goods help cut down on the wastage and also improve the performance
of the manufacturing process.
For implementing continuous flow or repetitive flow of production, it is necessary

that the workplace be systematised. An important step is to introduce the cellular
layout that helps in implementing a continuous flow of production. This is a time-
taking task which requires considerable effort and time to change the design of
the workplace. It involves planning the work cells which are important for the
one-piece flow. Once the cellular layout is designed and implemented at the
workplace, the next process is to calculate the takt time. This will help keep a time
check on the production for meeting the demands of the customer. For this, it is
necessary to measure the time of production with each process which is used for
the production and keep the process within the lowest repeatable time. This can
determine the quantity that can be produced in a week or month according to the
demand of the customer. The result gives the takt time required for manufacturing
one part that is free from defects. This way, it is easy to measure the processes for
effectively meeting the demands of the customers.
This system helps in increasing the flexibility of the manufacturing system and
it lets you stop production and start production when required with little or
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no wastage in the process. This controlled system is the main advantage of the
repetitive flow which ensures that the products and the supply of material are
stocked up in limit, and it avoids stocking up an extra amount of inventory. The
work is effectively divided between the operators for balancing the work cells and
creating a balance for completing the work efficiently.
3.2.5 POINT OF USE STORAGE (POUS)

Another important concept of lean is the Point of Use Storage or POUS. POUS
is the storing of raw materials at the workplace from where these are used for
production. In any manufacturing unit, excess movement and transportation of
raw materials from one end to another is also a form of waste. Raw materials are
shifted to the workplace when the requirement comes up. It is not easy to keep
a track of these movements which can lead to a lot of confusion in managing the
inventory system. The process of POUS helps eliminate the intermediate steps and
shifts the raw materials from docks to the work centre. In certain factories, the raw
material is offloaded and moved straight to the work centre.
POUS helps allocate the right amount of storage at a proper place directly in the
work centre. Keeping the correct amount of storage is important for maximising
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the space available for each specific location. This includes providing shelves,
bins and containers to hold the materials and organising tools. There needs to
be effective signage for enabling the handling of different materials so that the
workers can access what they need without wasting time.
POUS helps with effective handling of material which helps in reducing waste
and damage. This will help improve the operational effectiveness which will lead
to efficient production along with lowering of the overall costs. POUS provides
effective inventory management, simplified material handling, storage and
tracking of the material.
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3.2.6 PULL AND PUSH SYSTEMS
Pull and push systems are the part of lean mechanism for production control.
When there is a demand for products, and the inventory is in stock and available,
it is called the push system of production. The system of production is not based
on the demand of the customers. Pull system relates to the lean principle of JIT and
it is made to order. In this system, the production starts when there is the actual
demand for it. The inventory level in the pull system is kept to a minimum, and the
goods are produced within a lesser lead time and can be supplied at high speed.
Since the push system came earlier, it is used more commonly in the industries. The
pitfall of the push system is an error in forecasting of the demand. This error may
result in an excess amount of finished goods or inventory which would need to be
stocked. This leads to overutilisation of the processes to meet the excess capacity
for the actual demand. This results in unnecessary costs and wastage with stocking
of goods and inventory. A push theory suggests that the goods are produced and
pushed by the suppliers to their customers with the help of marketing.
The push system helps in the following ways:

Helps eliminate the bottleneck throughput time
Decreases the cycle time
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Brings down the set time

Removes the waste of waiting and transportation
Increases the customer order cycle
On the other hand, in the pull system, customers place their demands and pull
the goods from the suppliers. The system of pull is the lean method of decreasing
waste during the process of production. Since the flow takes place only if there
is a demand for it, it helps reduce the process of overstocking and optimise the
resources. The strategy of pull waits and responds according to the demand of the
customer. This form of production does not require any form of pre-production
and need limited inventory.
The theory of pull helps the organisation in the following manner:
Fast adaptation to changes in the work process
Decrease the waste of resources
Use the optimum capacity of the team
Deliver the goods much faster
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Improved flow of efficiency
Increases the level of productivity
3.2.7 VALUE-ADDED ACTIONS

A value-added action can be defined as an action that helps increase the value of
goods or services and enables the organisations to increase their profit margins.
For the value to be added to an action, it should be able to meet the following three
criteria:
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1. Client should be willing to pay for this activity
2. Action or activity should be done right the first time
3. Action must change the product or service in a manner which meets the need
or requirement of the customer
The value that is added by the activity adds value to the final output, and it helps
satisfy the customer. The value for the customers can be in the following ways:
Quality: The product or service should be produced according to the needs
of the customer and the quality of the product or service should satisfy the
customer and have to be exactly what the customer wants.
Delivery: Value for a customers is when the customers are satisfied with
the products or services and they get the delivery when they want it. It is
important to bring down the lead time and deliver the products or services
in a time-bound manner.
Cost: Value for a product or service is when the customers do not have to
pay more than they require to. It is doing things in an economical manner
without creating any form of waste.
For adding value to the processes, it is necessary to eliminate the non-value-adding
processes from the system.
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3.2.8 NO VALUE-ADDED ACTIONS

The no value-added actions are which do not increase the worth of a product
or service. For improving the system and the processes, it is necessary to
eliminate these actions and activities which do not add value to the system.
This will help the organisations increase their speed of production by reducing
their costs, and it helps improve the efficiency of the organisations. There is a
significant proportion of non-value-added actions in an organisation.
Some of the wastes in processes are mentioned below:

Unnecessary steps in a process: There are processes which have unnecessary
activities which do not add value. These are not needed in a process.
Delays in a process: These refer to the time when the processes need to stop
and wait for something to take place. This waiting time does not add value
and takes longer for customers to avail the service or product.
Resources and inventories being unutilised: Underutilisation of resources
results in extra costs. Managing and storing the resources which, in turn,
require physical space, manpower, time and funding that could have been
utilised for more value-added tasks.

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Producing or developing more than demand: Producing goods or
developing services more than demand is wasteful. It uses resources that
could have been utilised in better and more value-added ways.
Ineffective communication over long distances: The communication needs
to be effectively handled and managed. It needs to be acted on quickly to
keep the flow of information which can add value in the process.
Unnecessary movement of staff: Activities which involve too much action
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and movement of materials, information and people do not add value to the
work.
Having to do rework: Rework is required when a task or an activity is
repeated or when an activity has not been done right the first time. Also,
having to fix mistakes is also a waste of time.
Underutilisation of the staff: When an employee’s full potential is not used,
it is considered a waste. The solutions for avoiding waste of processes are as
follows:
zz Having simple and standardised processes which are clearly defined
zz Using value stream-mapping and flow-charting to identify non-value-
adding steps within the process
zz Removing the non-value-adding steps that reduce the processes which
are not required
3.2.9 BUSINESS VALUE-ADDED ACTION

Business value-added action refers to the increase in benefits that a business creates
by utilising their production process. The business value-added actions are very
important for the growth of the businesses. Businesses can work at adding more
value to their products and services to increase customer’s satisfaction, which
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will eventually lead to higher revenue. Some businesses charge more for certain
kinds of goods than other businesses. This is because they add more value to the
same product for satisfying their customers in comparison to the other businesses.
Adding value to the products and services helps them retain their customers by
differentiating the products and gaining a competitive advantage.
Certain ways for creating added value that can be easily implemented into the
business processes are as follows:
Value from customer’s perspective: The process of creating added value
initiates with the ability to see the value from the perspective of the customers.
Increase the speed of delivery: Increasing the speed of delivery so that the
people would be willing to pay for such additional value.
Offering better quality: For creating value, it is necessary to offer better
quality services in comparison to the competitors at the same price.
Adding value: For increasing business profits, it is important to find ways of
adding value to the products and services.
Convenience for customers: It is important for the businesses to find ways
for improving their profitability by increasing the convenience of purchasing
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the products or services.
Develop memorable customer experience: Businesses which put in the effort
for developing methods for satisfying customers and creating unforgettable
customer experiences are more likely to benefit.
Plan effective discounts schemes: Planning effective discount schemes can
benefit a business by creating wealth.
3.2.10 VALUE STREAM MANAGEMENT

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Value stream management involves various processes and steps used by
organisations to continuously deliver value to their customers. Value stream
management helps business enterprises manage the flow of value by tracking the
processes from the initiation stage to the end stage where products or services are
delivered to the customers. The process of value stream management takes place
with the help of value stream mapping (VSM). VSM helps visualising the processes
that move the product from the initial idea to its development and, thereafter, to
the process of production until it is sent to the customers. VSM tracks the value
stream of the product with the workflow along with various dependencies during
the different stages. It helps identify the bottlenecks and the obstacles which lead
to wastage and delay in delivering value.
VSM helps review the flow of process and information from start till end when
it is delivered to the customer. Just like any other flowcharts, VSM uses different
symbols to represent the different tasks and flow of information. VSM is helpful in
identifying and removing waste. Items which do not add value to the system are
Quick TIP mapped and removed.
VSM is a step-by-
step process for VSM helps create a detailed visualisation of all steps required in the workflow. It
creating a present helps show the flow of products from the manufacturer to the customer. The value
state value stream
map. stream map is created by the people involved in the process and is often a team
effort.
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The advantages of using a Value Stream Management (VSM) process are as follows:
The VSM process helps in identifying improvements, leveraging best practices
and promotes greater collaboration among teams and team members. This
helps in solving the problem of poor visibility to a great extent.
The VSM, if done properly helps in connecting various teams, tools and
applications. By doing so, the management is able to gain better visibility of
the overall flow of process and information. This, in turn, helps in gaining an
understanding of how the value is flowing towards the customer.
A proper VSM involves creating a value stream map. A value stream map
helps the management in gaining an understanding of the workflow and
dependencies at each stage. In addition, it also helps in identifying the
bottlenecks that cause wastage and may delay the final delivery to the
customers.
Figure 2 shows Value Stream Management:
Customer
Information
Process step 1
IT Process step 2 Process step 3 Process step 4
Flow
Material
Flow
Data: Cycle Data: Cycle Data: Cycle Data: Cycle

Time Uptime Time Uptime Time Uptime Time Uptime
Wait Wait Wait Production Wait Time

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Process Time Process Time Process Time Process Time Processing Time
Figure 2: Value Stream Management
3.2.11 QUALITY AT THE SOURCE (QATS)

Quality at the source is a principle of lean manufacturing which helps define
the quality of output with every step of the production process. Every person
involved with processes is responsible for contributing to the production and
on-time delivery for the product or service. It means that every worker has to
monitor and keep a track of the work process before the product is sent into the
next stage of production. The most important aspect of QATS is that each employee
inspects his/her own work before sending it ahead for further processing.
This method helps change the organisation’s culture which works to improve
the processes. It conforms to the quality standards and the customers’ needs.
Therefore, it is important to keep the following objectives in mind to help with the
cultural shift for ensuring quality at the source:
The customers’ needs and requirements must be understood
The people within the organisation should be aware of the quality standards
and the benchmarks required for products and services
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There is a requirement of a skilled workforce with multiple talents who can

help with different processes for products and services
Effective tools and technologies are required for identifying the problems
and rectifying them
Efficient communication is required for identifying the standards, processes
and performance
There must be proper methods of collecting data and tracking the faults
3.2.12 JUST-IN-TIME (JIT)

Just-in-Time (JIT) is a Japanese management philosophy and was first developed
by Taiichi Ohno for Toyota. The practice was first used at Toyota manufacturing
plants, which has been applied in practice and for meeting the demands of the
customers with minimum delays. JIT is initiated to meet customers’ demands,
keeping in mind the time, quality and quantity.
JIT aims to reduce the time within the processes of the production system.
In addition, it also brings down the response time from the customers and the
suppliers along with reducing the levels of inventory and cutting down on the
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costs. The JIT method takes help of the visual lean methods of Kanban for going
through various processes of production according to the requirements of the
customers. It helps bring down the stock-holding and reduce lead time by days,
weeks or hours.
The main characteristics of JIT are as follows:
Decrease in the order to payment timeline
Reduction in inventory cost
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Less space is required
Decrease in equipment handling and other costs
Reduction in the lead time
Reduction in the level of planning complexity
Improvement in quality
Increase in productivity
Faster detection of the errors and problems
Helps in empowering the employees
3.2.13 PROCESS INPUT VARIABLES

A Key Process Input Variable (KPIV) is a process input that determines the
significant impact on the output variation for a process or a system or on the
Key Process Output Variable (KPOV) of a product. This means that the process
input variables help determine the key process output variables. When KPIV is
sustained, it would give a consistent and predictable output. Therefore, the KPOV
is dependent on the KPIV which helps determine the total quality of the KPOV for
the process or the product. For example, KPIV’s involved in the process of candy
film production are temperature, pressure, stirring speed, plasticiser addition, etc.
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It is important to control and optimise KPIVs for improving the KPOVs. A very
good example of KPIV is income (an independent variable) which influences and
affects the consumption KPOV. The quality of the product or service which is a
KPOV is affected by the money factor KPIV. Therefore, the input variables can be
adjusted and controlled with the help of a control mechanism or by an operator.
3.2.14 PROCESS OUTPUT VARIABLES

A KPOV is a factor that is derived as an output from a business process. Variations
in KPOVs may impact the performance, reliability, efficiency of a system, the
manufacturability of the systems or certain objects. KPOVs can have a significant
impact on the efficiency, customers’ satisfaction and processes. It can be said that
a KPOV helps in increasing productivity, efficiency, customers’ satisfaction and
the profits of the business.
For example, for a garment manufacturer which wants to increase the profits and
reduce the costs, the KPOV could be the quality of the fabric used. The organisation
can procure better and inexpensive materials without having to sacrifice quality
parameter. The organisation must also understand the reaction of the customers
towards it. If the reaction is positive, then it could continue using that material and
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increase the profits.
3. The ____________ flow has the aim of having a single part or unit of
product move from process to process without any bottlenecks or delays
S elf in between.
A ssessment
Q uestions 4. The main objective of Just-in-Time is to reduce the costs and increase the
turnover of inventory and bring down the costs involved with holding
the stocks. (True/False)
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3.3 SUMMARY
Lean management is a philosophy for continuous improvement which seeks to
implement effective business processes for achieving a high quality of methods
for running the business in an efficient manner. Henry Ford was the first person
who introduced the Lean Management Practices on a large scale at the workplace.
The lean manufacturing methods are different from the traditional processes in a
number of ways. Lean management involves eliminating wastes and optimising
their processes which help in reducing the costs while delivering high-quality
products to satisfy the needs of the customers, which they are willing to pay for.
Lean management tools accelerate the process by maximising value towards their
customers along with reducing all forms of waste. Waste is a substance which adds
no value to any process in an organisation. Waste includes unwanted production
not fit for sale, misuse of resources or inventory, etc.
Kaizen is made from Japanese terms ‘kai-’ meaning change and ‘zen’ meaning
good. 5Ms is a model of structured system analysis for management which
helps managers in the manufacturing environment to acquire and distribute
resources to achieve business objectives. The process of repetitive flow also
known as continuous flow manufacturing or one-piece flow originated at the
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Toyota Production Systems. Another important concept of lean is the Point of

Use Storage or POUS. Point of Use Storage is the storing of raw materials at the
workplace from where they are used for production. Push and pull systems are
a part of lean mechanism for production control. A value-added action can be
defined as an action that helps increase the value of goods or services and enables
the business organisations to increase their profit margins. The no value-added
actions do not increase the worth of a product or service which is delivered to
customers. Value stream management involves various processes and steps used
by the organisations to continuously deliver value to their customers. Quality at
the source is a principle of lean manufacturing which helps define the quality of
output with every step of the production process. JIT is a Japanese management
philosophy and was first developed by Taiichi Ohno for Toyota. KPIV is a process
input that determines the significant impact on the output variation for a process
or a system or on the KPOV of a product.
3.4 KEY WORDS

Lean management: It is a philosophy for continuous improvement.
5Ms: It is a model of structured system analysis for the management.
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Repetitive flow: It is a lean principle which has the objective of eliminating
or reducing the waste.
Point of Use Storage (POUS): It is the storing of raw materials at the
workplace from where they are used for production.
Push system and pull system: These are the part of the lean mechanism for
production control.
Value-added action: An action that helps increase the value of goods or
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services.
No value-added actions: Actions which do not increase the worth of a
product or service.
3.5 CASE STUDY: DELL’S LEAN TRANSITION

Dell Computer Corporation is the number two supplier and also one of the leading
sellers of PCs. Its main competitor is the Hewlett Packard. Due to its unique
method of marketing, Dell has accomplished exceptional sales. It has been able to
develop a successful inventory production model because of capable resources.
Because of this, Dell has been able to gain a competitive edge over its rival
computer organisations, who copy and replicate it. Also, Dell has well-planned
JIT inventory system along with excellent supplier integration. This approach has
helped Dell cut down on lead time in serving customers for laptops and computers
and bring down the inventory costs. This successful process has worked well for
the company.
Lean methods of JIT inventory systems have evolved over time and help increase
the level of production. JIT inventory systems also build a leaner manufacturing
system that helps minimise the level of inventories. JIT is a cost-effective approach
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and also helps make production operations efficient in comparison to other

methods of production.
Dell realised the importance of JIT inventory and believed that it would be a good
opportunity for the business processes. JIT inventory has helped Dell achieve
continuous improvement of its business processes. Dell has also realised that the
costs could be reduced by working on optimising and integrating the computer
manufacturing system. Since its inventories were minimised, therefore, inventories
have helped build an overall leaner supply chain for it.
JIT requires a lot of support from the workforce, and the company’s strategic
management team for establishing it. Dell has believed that the JIT systems
would require an effective pull production method of workflow which would be
useful within the operation. It is the demand of the customers which initiates the
production of Dell computers. Generally, Dell prefers to use the direct marketing
model for selling its computers and laptops. But there are times that the demand for
computers can increase without any specific reason. Dell has an effective method
to counter this situation even though with low inventory because Dell is able to
work and push through the processes of the manufacturing to the capacity to meet
the demand that succeeds supply. For such beneficial reason, many organisations
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globally are making the transition into adopting JIT manufacturing methods for
their businesses.
QUESTIONS
1. Why did Dell decide to use JIT manufacturing method?
(Hint: For achieving zero inventory)
2. How did JIT help in building a leaner supply chain for Dell?
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(Hint: Improved supplier integration, cost-effective approach, improving
performance of their business, etc.)
Exam Check
1. What is the main philosophy of lean management?
a. Increase the stocks
b. Maximise on the resources
c. Flow value to customers
d. Decrease the level of inventory
2. What is the waste that should be reduced while working on the demand of
the customer during the flow of production and reducing the time scale?
a. Motion
b. Inventory
c. Unused people skills
d. Inappropriate processing
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3. Which one of the terms given below add to value-added work?

a. Producing a component
b. Carrying the inventory to the production area
c. Reworking on the defective part
d. Producing the goods before the schedule
4. Which of the following is an important principle of lean management?
a. People are in agreement with the method
b. Operators are given time to train
c. The management gets trained to train the others
d. People are involved and respected
5. The process of overproduction, excess inventory waiting and scrap are
considered as_________.
a. Muda b. Kanban
c. CFM d. TPM
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6. Which of the following lean terms relates to value stream mapping?
a. Cycle time
b. Pitch
c. Understanding customer value
d. Takt time
7. Which of the following lean principles should be used for the operations
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with no work in process (WIP) in between operations?
a. One-piece flow
b. Takt time
c. Scheduled point
d. Interval
8. Which of following is not the part of the lean principle?
a. Pull and flow from the customer
b. Value to customer
c. Team structure and empowerment
d. Total utilisation of resources
9. Which one of the following is related to the lean?
a. Individual efficiency and departmental structure
b. High utilisation of machines
c. Eliminating the barriers of flow
d. Controlling the business by tracking
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10. Which one of the following is not the significant element of Just-in-Time?
a. Improve the quality to zero defects
b. Reduction of lead time by reducing steps
c. Save money by reducing workforce
d. Have only the required inventory
11. Which of the following is essential for sustaining the lean?
a. Continuous improvement
b. Implementing the flow
c. Reducing the inventory
d. Empowering the employees
12. The lean methods and techniques were developed and perfected by
__________.
a. Ford b. Toyota
c. IBM d. Oracle
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13. Which of the following is not part of the waste in lean management?
a. Overproduction b. Waiting
c. Taxes d. Transportation
14. Who among the following was the first person who introduced the lean
management practices on a large scale at the workplace?
a. Eli Whitney b. Frederick W. Taylor
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c. Mike Pascal d. Henry Ford
15. Which tool of lean helps with visualising the processes for a cause?
a. Value stream mapping b. Six Sigma
c. Takt time d. JIT
16. The process of lean management is used in industries that are mainly into
being _________________ with the level of repetitive human processes.
17. Changing from the traditional method into the lean method of working
will not be easy for any organisation and can involve ____________ with a
number of cultural issues and problems.
18. The ____________ of working looks at the system as a whole and does not
want to look at ways for improving the methods and the processes.
19. Lean method focusses on improving and building on processes that can
cause ___________.
20. _________ looks at improvement of the system which means when the
workers encounter any abnormality in the machine or system, they are
expected to stop their work to find a solution.
21. For implementing __________ of production, it is necessary that the
workplace be systematised.
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22. Frederick W. Taylor was the first person who introduced the lean management
practices on a large scale at the workplace. (True/False)
23. In the traditional methodology, people perform the same task in the same
manner until new and better processes are discovered. (True/False)
24. Kaizen consists of a number of ideas for making the working environment
effective with improving procedures, people working as a team, job
satisfaction and a safer environment for the people to work. (True/False)
25. The process of repetitive flow decreases the flexibility of the manufacturing
system and it lets you stop production and start production when required
with little or no wastage. (True/False)

1. Which of the following terms has been exemplified incorrectly?
i. Motion – Using a long path for reaching a folder on your computer
ii. Materials – Taking print of documents that are not required
iii. Rework – Partial documentation
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a. Only i
b. Both i and iv
c. Only iv
d. Both ii and iii
2. Assume that you visit a particular production plant and observe that in any
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given queue at any point of time, only one item is waiting to be started. What
type of production flow does the plant have?
a. One-piece flow b. Batch production
c. Mass production d. Job production
3. Assume that one fine day, you do a self-evaluation and want to better yourself.
You resolve that each week you will do away with one of your negative
habits and adopt one new positive habit. This activity can be considered as
an application of _______ technique to human life.
a. Waste elimination b. Just in Time
c. Kaizen d. Poka-Yoke
4. Which of the following options does not represent an opportunity for
employing lean?
a. Poor productivity rate
b. Excess inventory
c. Negative feedback with respect to quality
d. Inventory turnover = 15
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5. Which of the following cannot be considered as a criterion for value-addition?

a. Customer is willing to pay for extra processing
b. Customer regards some step as not necessary
c. A step in process is removed and the customer provides a negative
feedback
d. Compliance with regulatory requirements
3.8 ANSWER KEY

Topic Q. No. Answer
Philosophy of Traditional Operation 1. resistance
and Lean Operation
2. False
Concepts Used in Lean Management 3. repetitive
B.
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SHORT ANSWER QUESTIONS
4. False
Q. No. Answer
1. c. Flow value to customers
2. b. Inventory
3. a. Producing a component
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4. d. People are involved and respected
5. a. Muda
6. c. Understanding customer value
7. a. One-piece flow
8. d. Total utilisation of resources
9. c. Eliminating the barriers of flow
10. c. Save money by reducing workforce
11. a. Continuous improvement
12. b. Toyota
13. c. Taxes
14. d. Henry Ford
15. a. Value stream mapping
16. assembly-oriented
17. resistance
18. traditional method
19. errors
20. Kaizen
21. repetitive flow
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Q. No. Answer
22. False
23. False
24. True
25. False

Q. No. Answer
1. c. only iv
2. a. One-piece flow
3. c. Kaizen
4. d. Inventory turnover = 15
5. b. Customer regards some step as not necessary

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@ SUGGESTED BOOKS
Charron, R., Harrington, H., Voehl, F., & Wiggin, H. (2015). The Lean
Gopalakrishnan, N. (2010). Simplified Lean Manufacture. New Delhi: PHI
Learning.
E-REFERENCES
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Chomątowska B. & Żarczyńska-Dobiesz A., (2014), Elimination of Waste in
Production Enterprises – case study, Research in Logistics & Production, Vol. 4,
No. 2, pp. 157-166.
Abrahamsson, S. and Isaksson, R., 2012. Implementing Lean – Discussing
Standardization versus Customization With Focus On National Cultural
Dimensions. Management and Production Engineering Review
What is Kaizen (continuous improvement)? – Definition from WhatIs.com.
(2019). Retrieved from https://searcherp.techtarget.com/definition/kaizen-
or-continuous-improvement
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CHAPTER
4
LEAN MANAGEMENT TOOLS
Table of Contents
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Chapter Objectives
Introduction
Learning Outcomes
4.1 Lean Management Tools
4.1.1 Benefits of Using Lean Management Tools
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4.2 Types of Lean Management Tools
4.2.1 5S Workplace Organisation
4.2.2 Overall Equipment Effectiveness (OEE)
4.2.3 Plan Do Check and Act (PDCA)
4.2.4 Error Proofing/Poka-Yoke
4.2.5 Root Cause Analysis (RCA)
4.2.6 Kanban
4.2.7 Value Stream Mapping (VSM)
4.2.8 Process Mapping
4.2.9 Use of Visual Controls
4.2.10 Total Productive Maintenance (TPM)
4.2.11 Takt Time
4.2.12 SMART Goals
4.2.13 Bottleneck Analysis
4.2.14 Continuous Flow
4.2.15 Policy Deployment (Hoshin Kanri)
4.2.16 Automation (Jidoka)
4.2.17 Gemba (Place of Action)
Table of Contents
4.3 Summary
4.4 Key Words
4.5 Case Study
4.7 High Order Thinking Skills (HOTS)
4.8 Answer Key
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Lean Management Tools
 Describe the significance of lean management tools

 Explain the benefits of using lean management tools
 List various tools of lean management
Describe important lean tools, including Kanban, Value Stream Mapping,
 Automation, Total Productive Maintenance (TPM), Error Proofing/Poka-Yoke,
Root Cause Analysis (RCA), SMART Goals, etc.
INTRODUCTION
Read In the previous chapter, you studied the major differences that exist between the
traditional operations and the lean operations. You also studied some of the most
Pre-read Connect
frequently used lean concepts, such as POUS, QATS, JIT, Pull and Push system,
etc.
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Lean management is a new management approach which is mostly used in
the manufacturing industries. Although lean management is being adopted
by the service industries, it is yet to be adopted on a large scale. Traditionally,
the organisations were managed through push systems. But the application
of lean systems has shown a mark of improvement in various aspects, such as
quality of products and services, cycle times, customers’ satisfaction, customer
responsiveness, waste reduction, cost savings, reduced lead time, reduced
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inventories, improved productivity, higher profit margins, etc.
Lean management is not a single technique that can be applied to an organisation’s

processes and systems. Rather, it involves use of various tools, techniques and
concepts which help in making an organisation leaner.
Lean management improves organisational operations by systematically

eliminating the wastes from the systems and processes. In many organisations, the
majority of the time is consumed by non-value-added activities and such activities
must be eliminated by using one or more lean tools.
In this chapter, you will study about the lean management tools and the benefits
of using these tools. The chapter also decribes various types of lean management
tools, like OEE, PDCA, Poka-Yoke, RCA, Kanban, SMART Goals, Gemba, etc.
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LEARNING OUTCOMES
Express your views regarding lean as a philosophy along with its
advantages and disadvantages
Propose the use of one or more lean tools for a particular industry along
with the reasons for the same
Rearrange a place using the 5S tool and describe any process using a
process map, etc.
4.1 LEAN MANAGEMENT TOOLS

Over the previous two-three decades, the significance of applying lean
management or using lean tools has increased manifold. A large number of
organisations are now starting to follow the lean principles and practices. Lean
management tools have found unequalled acceptance from the manufacturing
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organisations. Organisations are increasingly adopting lean management systems
for the following reasons:
Improving product quality
Reducing resource requirement
Reducing costs
Improving customers’ satisfaction
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It must be noted that these benefits are realised without any trade-off situations.
Lean operations require lesser inputs, machinery, materials, time, space, effort,
cost and resources.
Today, lean has been adopted by the different industries, like healthcare, financial
services, project management, construction, etc. Lean management approach has
its proponents and opponents. Opponents of lean believe that lean management
cannot be used and standardised, and, hence, it cannot be repeated and replicated.
On the contrary, proponents of lean believe that lean can be applied to most of the
industries and value systems.
Lean management approach includes an extensive range of principles and tools
which help in identifying and removing the wastes, and, hence, delivering value
to customers.
The main principles that are critical to lean tools are as follows:
Focussing on value from the customers’ viewpoints
Eliminating steps that do not add value
Performing value-creating steps
Minimising defects
Reducing the production cycle time by decreasing the waiting time among
various processing stages
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Improving the productivity of labourers

Utilising the equipment and space properly
Removing bottlenecks
Decreasing the machine downtime
Bringing flexibility in production
4.1.1 BENEFITS OF USING LEAN MANAGEMENT TOOLS

A lean tool is a generic term and it refers to any device, application, process,
technique, method or procedure that an organisation can use to remove waste and
create value for its customers. Any organisation which wants to reduce inventory
costs, achieve zero defects, reduce lead time, and streamline its operations would
be a perfect prospect for adopting lean tools.
Application of lean tools helps organisations become competitive and innovative.
It does so by creating responsive systems, keeping in mind the financial and
resource constraints.
Following are the two main pillars of the lean management system:

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Just-in-time or JIT (Pull system): Using JIT system, an organisation can
make order-based production. Under JIT systems, only the products that are
required are delivered on demand and in the quantities stated explicitly.
Jidoka (Quality): The meaing of this Japanese term is intelligent
automation or humanised automation or automation with a human touch.
An organisation practising Jidoka trains its employees to improve the
quality of production on a continuous basis by monitoring and observing
the production process, finding problems and the causes of problems, get
the production systems halted and eliminating the root causes of problems.
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Organisations are adopting lean because lean management practices and tools are
extremely beneficial. Figure 1 lists the major benefits of adopting lean management
and tools:
Improve Quality
Faster and Efficient Delivery
Improve Visual Management
Improve Human Resources Efficiency
Easy to Manage
Involve the Total Organisation
Eliminate Problems
Increase Space Utilisation
Create Safer Work Environment
Increase Profits
Improve Employee Morale and Satisfaction
Figure 1: Benefits of Lean Tools
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Let us now discuss the benefits of using lean tools as follows:

Improve quality: Lean management tools involve several problem-solving
techniques which help remove the defects and faults, and, hence, help in
strengthening the production process. This helps in improving the quality of
the products or services.
Faster and efficient delivery: Lean tools make use of JIT and pull to help
in production with a reduced lead time. This approach helps in providing
faster and better service to the customers.
Improve visual management: Lean management tools use visual control
techniques which improve the management by setting up visual control
of the process. This process allows effective and easy identification of the
problems when they come up during the process of manufacturing.
Improve human resource efficiency: The employees get trained on lean
management tools and learn to control the work processes and systems. This
apprach helps improve employees’ efficiency by repeating the processes
and gives them a better understanding of the operations. Lean tools help
improve employees’ skills. Lean management tools maximise the workforce
performance by allocating human resources effectively. Also, it helps the
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organisation in getting more work done with a minimum workforce.
Easy to manage: Lean tools are standardised and help the workers understand
their respective roles and responsibilities. This approach manages work in
an easier and more efficient way.
Involve the total organisation: Lean management tools can be utilised in
different areas of an organisation and is not limited to any specific area. This
also involves the entire company and as the part of the team and striving to
achieve the common objectives.
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Eliminate problems: Lean management tools such as Root Cause Analysis
(RCA) are used by teams to investigate problems and issues and their root
causes until they are resolved.
Increase space utilisation: Lean tools help fine tune the operations and
processes. This approach is used for better use of space, improve floor
planning, reduces inventory and increases storage space for parts.
Create safer work environment: Lean management tools help in creating an
organised work environment by removing unnecessary elements.
Increase profits: Lean management tools eliminate wastage and improve
quality of the products and services. This leads to an increase in productivity,
and, hence, the organisation increases its profits.
Improve employees’ morale and satisfaction: Lean management tools
make the employees feel that they are important and are a part of the system
so that they are contributing in the organisation. This approach helps in
strengthening employees’ morale and satisfaction and reduce uncertainty in
the workplace.
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1. Lean management helps in creating more _________ for the customer

with fewer resources.
S elf
A ssessment 2. Lean management tools cannot be utilised in different areas of an
Q uestions organisation. (True/False)
4.2 TYPES OF LEAN MANAGEMENT TOOLS

Nowadays, organisations are increasingly upgrading manufacturing units
with effective and new practices. For this, they are also making use of efficient
management tools to improve their systems and processes. Global demand is
increasing which has resulted in requirement of newer processes of manufacturing.
The production has to be increased, but at the same time, the quality of products
needs to be maintained. Also, less wastage and less production time are required,
and costs should be reduced. For achieving these, use of lean management tools is
benefical. Lean tools take care that resources are not overburdened and workload
is balanced using the value stream. Lean tools effectively work towards bringing
a balance in the distribution of work, keeping in mind various aspects, such as
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quality, resources, time and costs.
There exist more than 50 lean tools that an organisation can use for lean management
practices. Let us list a few major lean tools as follows:
5 Whys Overall Equipment Effectiveness
(OEE)
5S Method
Plan Do Check Act (PDCA)
A3 Problem Solving
Poka-Yoke
Andon
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Quick changeover
Bottleneck analysis
Right first time
Cellular manufacturing
Root Cause Analysis (RCA)
Continuous flow
Seven Wastes
Continuous improvement
Single Minute Exchange of Die
Demand management
(SMED)
Gemba
Six big losses
Heijunka
SMART Goals
Hoshin Kanri
Standardised work
Jidoka
Takt time
Just-in-Time (JIT)
Total Productive Maintenance
Kaizen (TPM)
Kanban Total Quality Management (TQM)
KPIs Value Stream Mapping (VSM)
Lean audit Visual management
One-piece flow
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Despite the availability of such large variety of lean tools, a lean tool is selected
based on the requirements of the organisation.
The lean tools are often interrelated and are advantageous to the overall process
improvement and production facility.
It is beyond the scope of this chapter to provide a detailed description of all the
lean tools mentioned above. However, in the upcoming sections, let us study some
of the most important lean tools.
4.2.1 5S WORKPLACE ORGANISATION

The 5S technique focusses on organising any form of business operation, workplace
or process by eliminating wastes. Using 5S, an organisation can improve workspace
by eliminating unnecessary processes and improving the work system. The name
of this lean tool has been derived from the initials of five Japanese words. These
5 Japanese words and their meanings in English language are as follows:
1. Seiri – Sort
2. Seiton – Set in order
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3. Seiso – Shine
4. Seiketsu – Standardise
5. Shitsuke – Sustain
1. Seiri/Sort: Under this activity, all the unnecessary things are eliminated
from the workplace. This involves a process of ‘red tagging’. A red tag is
put on the articles that are not required for finishing a task. Once the tools,
materials, equipment and goods have been tagged red, they are reallocated
to a different place, and only those items are kept closer to the workplace
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which are used regularly. The method of sorting helps in effective use of the
workspace and the removal of clutter.
2. Seiton/Set in order: Setting in order means visual management and effective
storage that creates an efficient working environment for achieving the goal.
The working environment should be well-organised, uncluttered, ergonomic
and navigated easily. The method of effective storage helps with keeping
every item in its pre-determined location after use. The items can be marked
with using colour coding and labels which help in locating the things. This
effective method of storage makes things simple and easy for people to locate
important items and work in an environment which is less stressful.
3. Seiso/Shine: Once the place is clutter-free and the storage space is well-
organised, the next step is to keep the workplace clean everyday. The entire
workplace, including equipment, tools, machines and the working surface
should be cleaned regularly. Employees feel comfortable and prefer to work
in a clean environment which would help them achieve the goals of the
organisation.
4. Seiketsu/Standardise: It is important to standardise the methods and
processes. Also, these new norms should be followed effectively by everyone.
Employees soon start following the new methods. The employees should
be regularly reminded of the new norms using reminders, emails, visual
posters, etc., to adopt the new standards.
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5. Shitsuke/Sustain: This step is challenging, and, hence, requires the new

positive changes in the working environment. For this, it is necessary that
the employees get trained for using new methods and they comply with the
organisation’s 5S methods.
It is challenging to implement the 5S and sustain the changes in the long run for the
organisation. The successful implementation of the 5S helps improve the systems
and develop a sense of self-esteem for the employees. Also, it helps reduce the
training time for new employees when they join the organistaion.
4.2.2 OVERALL EQUIPMENT EFFECTIVENESS (OEE)

Overall Equipment Effectiveness (OEE) is considered as a gold standard for
measuring the manufacturing productivity. OEE works with three factors
N ote (losses) related to the manufacturing process, namely Availability, Performance
Effectiveness and Quality. When these factors are considered collectively, the OEE outcome is
refers to the expressed as a percentage. This percentage shows the current production efficiency
relation between
what can have for a machine, line or cell. By measuring the OEE, an organisation can identify the
been produced root causes of the problems and associated inefficiencies.
by a process and
what has been By calculating OEE, it becomes easy to compare the performance of different
actually produced.
For example, if
a process had
to generate 30
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organisations that operate in different situations and processes. OEE can also be
used as a Key Performance Indicator (KPI) for measuring the success of initiatives.
OEE metric can be used to assess the present status of a manufacturing process,
items at its end,
but it generates but it is difficult to understand the impact of different issues in the manufacturing
only 25, then the processes, and how these impact the overall process. Mathematically, OEE is
effectiveness of calculated as:
process is only
25/30 or 83.33%. OEE% = Availability × Performance × Quality
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Here, availability is the percentage of time that a machine or any other physical
asset is expected to be available for production as scheduled.
Production may be halted because of planned breaks, such as scheduled

maintenance which is not included in availability. However, unplanned breaks,
such as equipment breakdowns, unavailable materials, unplanned downtime
reduce the availability and result in loss.
Non-availability leads to lost production. Availability loss is calculated by using

actual run time and the planned run time as follows: Mathematically, availability
loss is calculated as:
Run Time
Availability =
Planned Production Time
Performance is calculated as the ratio of the actual run rate to the theoretical
maximum rate. Performance loss helps determine the amount of production using
the ideal cycle time, total count and run time. Mathematically, performance is
calculated as:
Ideal Cycle Time × Total Count
Performance =
Run Rate
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Quality helps in identifying scrap losses in the form of products which do not
meet the quality standards. It is calculated as the ratio of goods produced to the
total produce. Mathematically, it is calculated as:
Good Count
Quality =
Total Count
Organisations use OEE for the following reasons:
Increasing the output from existing resources to meet the demands of the
customers
Reducing the cost of production in order to increase the sales margins
Making the existing systems more flexible
Promoting a healthy and sustainable culture with focus on improvement of
production performance
4.2.3 PLAN DO CHECK AND ACT (PDCA)

The PDCA process was developed by Dr. William Edwards Deming in the 1950s.
It was based on the scientific method of problem solving. The PDCA cycle is
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also called the Deming wheel or the Deming cycle. It is an iterative method for
continual improvement of processes, products or services. This process can be
used in human resource management, project management, product life cycle
management, supply chain management and any more different domains of
business.
The PDCA cycle is shown in Figure 3 as follows:

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Plan Perform
Plan Do
Act Check
Improve Monitor
Figure 3: PDCA Cycle
In the Plan phase of the PDCA cycle, the problem needs to be defined by collecting
relevant data and by finding out the root cause of the problem. In the Do phase,
the organisation develops and executes the solution for solving the problem. In the
Check phase, the results of the data before the Do phase and after the Do phase are
compared. In the last or the Act phase, the organisation documents the results of
the previous three phases and informs the concerned people about the changes in
the process. Also, suggestions for addressing the problem in the next PDCA cycle
can be incorporated in this phase.
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The PDCA cycle can be used for the following reasons:

Testing and investigating a number of solutions within a controlled
environment
Using and adapting to solutions to avoid wastage before moving into large-
scale methods
Implementing continuous improvement and change
Executing Total Quality Management (TQM) or Six Sigma initiatives
Improving and developing the processes
4.2.4 ERROR PROOFING/POKA-YOKE

The term Poka-Yoke was used by Shigeo Shingo, an industrial engineer at Toyota,
Japan in the 1960s. Poka-Yoke basically means ‘mistake-proofing’ or avoiding
(yokeru) errors (poka). Poka-Yoke as a lean tool helps in avoiding mistakes in a
manufacturing process. Poka-Yoke ensures that right or suitable conditions exist
before a process step is executed. This helps in preventing defects from coming up
in the first place. Poka-Yoke investigates and removes the defects when they come
up. Also Poka-Yoke removes the mistakes from the process as early as possible
as follows:

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and even from situations where it is not possible. The main goal of Poka-Yoke is
Achieve zero defects

Prevent errors that lead to defects
Detect defects
Reduce the impact of the defect
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Poka-Yoke technique should be used in an environment where a mistake can
occur or anything could go wrong in the entire system. Poka-Yoke can be used in
services or manufacturing industry to prevent any form of errors. The errors can
be in any of the following forms:
Processing or operation error: Processing error occurs when a process or
operation is not performed according to the Standard Operating Procedures
(SOPs).
Setup error: Setup error occurs when a wrong method is used or when
machine settings are adjusted incorrectly.
Missing part error: Missing part error occurs when one or more parts of the
product are not assembled.
Improper part error: Improper part error occurs only when some wrong part
is used during the assembling or production work.
Measurement error: Measurement error occurs when some errors occur in
the measurement of the parts.
Lean management uses the Poka-Yoke as a quality assurance process and also for
preventing errors from appearing. Benefits of using Poka-Yoke are as follows:
It works at helping the work right the first time
It ensures that the mistakes do not occur in process
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4.2.5 ROOT CAUSE ANALYSIS (RCA)

RCA is a systematic process used to identify the root causes of problems or events
STUDY HINT so that the organisation can find a suitable solution to solve the problem. RCA is
RCA uses the 5 based on the concept that the problems should be prevented before they develop.
Whys technique RCA is a comprehensive method and contains a number of problem-solving
to answer various
questions and to methods. It is used to identify the problem and understand the main cause of non-
find the root causes conformity or problem of quality.
of problems.
A typical RCA process is shown in Figure 4:
Root Cause Analysis Process
IT Define the
Problem
Collect
the Data
Identify the
Possible Causal
Factors
Identify the Recommend
Root Cause(s) & Implement the
Solutions
Figure 4: A Typical RCA Process

Source: https://www.edupristine.com/blog/tags/root-cause-analysis
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At times, the root causes of the problems are ignored which aggravates the
problems. When RCA is performed correctly, it leads to discover the reasons for
non-conformance.
RCA can be used in the following cases:

Office processes and procedures
Quality control problems
Incident analysis
Safety-based situations
Failure analysis in engineering and maintenance
Change management or continuous improvement activities
Software analysis
RCA helps in answering the following questions:
What are the problems?
How did the problems arise?
Why did the problems occur?
What actions can be taken to prevent the problem from recurring?
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Benefits of using RCA are as follows:

Finding out a logical method to solve the problems with the existing data
Identifying the ways to improve the organisational processes
RCA process can be repeated where one process can confirm the results of
another
4.2.6 KANBAN
The Kanban system was developed in Japan by Toyota’s engineer Taiichi Ohno.
It is a simple inventory control system. It is used to control and manage the work
and inventory. Kanban makes use of Kanban cards for managing the inventory.
Kanban helps visualise the workflow and the actual work happening. Kanban aims
to find the potential bottlenecks in the workflow and fix them as early as possible.
It ensures that the processes are run in a cost-effective manner at an optimal speed.
In lean, Kanban is used as a scheduling system which helps in estimating what to
produce, when to produce and how much to produce.
A typical Kanban board appears as shown in Figure 5:

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To Do Doing Done
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Figure 5: A Typical Kanban Board
A Kanban board may be implemented electronically or manually. Six important

principles of Kanban are as follows:
Visualising the present workflow: All the activities that are the part of the
work process are listed on the Kanban boards with the help of stickers or
cards.
Limiting the amount of Work in Progress (WIP): It is helpful to balance
the flow of work so that the employees complete the work at hand before
taking up new work. The number of WIP for each column of board should
be limited.
Managing flow: In Kanban, flow can be managed by highlighting various
stages of the workflow in addition to the status of work in various stages.
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Making process policies explicit: When a process is visualised using Kanban

board, it also becomes relevant to define and visualise the policies, process
rules or guidelines. Guidelines define how the work is supposed to be done.
When explicit guidelines are created and put up for all the employees, they
remain the same for each employee and there is no gap in understanding.
Implementing feedback loops: All the stages of the Kanban board are
monitored continuously using various metrics, reports and visual cues which
help in getting a continuous feedback on the work progress in the system.
Continuous improvement: Kanban systems are designed to support
continuous improvement as small and gradual changes are brought in.
Kanban uses the best possible team workflow and encourages active,
ongoing learning and promotes continuous collaboration with continuous
improvement.
Benefits of Kanban are as follows:
Short cycle time helps in delivering features faster.
It is responsive to changes.
It is ideally used when priorities change frequently.
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It balances the demand against throughput guarantees that the customer-
centric features are incorporated.
Implementation of Kanban requires a major organisational change.
It helps reduce the waste and remove activities that do not add value.
It motivates the team members and empowers them to perform well due to
rapid feedback loop which brings improvements.
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4.2.7 VALUE STREAM MAPPING (VSM)
VSM has been introduced in the first chapter. Let us now study it in a little more
detail. VSM is a systematic method in which a flowchart is created to display the
current state of a process in an organisation. A value stream map presents people
resources, activities and information flows that are involved in the production
process.
After creating a value stream map, organisations can visualise how end-to-end
processes work, analyse the actual work and output, and identify opportunities for
improving the processes. It also helps review the flow of process and information
from the start till the end when it is delivered to customers. A VSM map is created
using certain symbols. The non-value-added items do not add value to the system
which are mapped with the help of VSM.
For manufacturing organisations, a VSM map shows the flow of goods from the
manufacturer to the end customers.
A VSM map is created by using the following steps:
1. Select the product or product family.
2. Decide the value stream symbols to be used.
3. Map the process boundaries clearly that start with the supplier and end with
the customer.
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4. Map all the processes in between the supplier and customer stages.
5. Map all the information flows, including feedback flows.
6. Collect relevant data related to each process shown in the map. This may
include inventory, cycle time, changeover time, up-time, number of operators,
shifts, net working time, batch size, scrap rate, etc.
7. Create a time line using information, such as total process times, and lead
times for inventory through the processes. The amount of stock is calculated
in terms of days, and this information is added to the map.
The main advantages of a VSM are as follows:
It helps in identifying and removing wastage.
It identifies the bottlenecks.
It facilitates cross-functional teams work towards customers’ satisfaction.
It is an inexpensive method.
It promotes process improvement.
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4.2.8 PROCESS MAPPING
A process map is also called a process flowchart. A process map shows the sequence
of steps from the beginning till the end. A process map shows the tasks which
are associated with the process, flow of materials, information and the decisions
that need to be made with the flow. Creation of a visual map helps in organising
the processes and displays information which can be seen by everyone. There
are many ways to create process maps, such as VSM, flow charting, brown paper
exercise, etc. It must be noted that VSM is the most important and frequently used
process map. Some important differences between process mapping and VSM are:
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Process Mapping is most commonly used in Six Sigma quality systems,
whereas VSM is usually associated with lean quality management.
Process mapping helps in creating graphic visualisation to represent the
interactions among various complex processes. The processes may be
technical or organisational. On the other hand, VSM helps in creating a
graphic visualisation of the various steps involved in a process with changes
occur at each step.
Process mapping is used to understand the interrelationships between the
various processes, whereas VSM helps in understanding information and
material flow.
A process map involves questions, such as who does the tasks, which tasks are
involved in the process and when does a task happen. Businesses use process
mapping to identify errors and mistakes. These are also representative of how
predictably the processes can run in an organisation. Some of the important
benefits of process mapping are as follows:
It helps clearly represent the process.
It ensures a systematic control over the functions of the process.
It helps establish norms for operations.
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It eliminates wastage.
It improves process visibility.
It ensures the compliance with industry standards.
Figure 6 displays a typical process map:
Option 1 Task 2
Task 1 Task 3
Specific Time
Association Triggers the Event
Default Option Task 4

Data
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Source: https://www.smartdraw.com/business-process-mapping/
4.2.9 USE OF VISUAL CONTROLS

You have already studied the concept of visual management. Under visual
management, the organisation focusses on designing a workplace that is self-
explaining, self-ordering and self-improving. A concept related to visual
management is visual control. Visual control is a technique that makes use of signs,
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symbols, information displays, layouts, handling tools, colour-coding, poka-yoke,
etc. These methods or techniques serve as controls. A well-designed visual control
system helps an observer in identifying the:
Product flow
Operations standards
Work schedules and problems
Visual control system is used in many areas where information is transmitted
by using visual signals instead of text or other written instructions. These help
in recognising the information being transmitted and increasing the clarity and
efficiency of the system. Organisations focus on the processes and compare
the expected and actual performances with the help of visual controls. Such a
comparison reveals which systems are not performing and when and where the
improvements can be made.
Some of the advantages of using visual controls are:

Identification of problems
Reduction in manufacturing costs and wastes
Reduction in production lead time
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Adherence to delivery dates

Creation and maintenance of a safe and comfortable working environment
4.2.10 TOTAL PRODUCTIVE MAINTENANCE (TPM)

In lean, TPM is a method or system program for maintaining the machinery,
equipment and plant for achieving operational efficiency in production. This term
N ote was first used and phrased by a Japanese organisation named Denso. Productive
There are two maintenance helps in improving the overall production system, tries to achieve
major types
of machine
no breakdowns, no defects and avoids lag in the running of a system. TPM is
maintenance, an extremely important tool for organisations which use a lot of machines and
namely proactive equipment.
maintenance
and reactive One of the major objectives of TPM is to create a safe environment with no
maintenance. accidents. The TPM highlights the role of the operators for maintaining their
Reactive equipment which also helps in increasing job satisfaction and morale of the
maintenance
includes
workforce. TPM emphasises control and preventative maintenance for maximising
emergency operational efficiency of the equipment.
maintenance
and corrective Some of the major benefits of TPM are as follows:
maintenance.
Proactive
maintenance
includes preventive
maintenance,

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Improvement in productivity
Increased uptime of equipment and machines
Reduced cycle time
predictive
maintenance, Removal of defects
condition-based
maintenance, Minimum unscheduled maintenance
scheduled
maintenance
4.2.11 TAKT TIME
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and routine
maintenance. Takt is a German word for baton. It refers to beat, timing and regulation of speed.
TPM is a new type Takt time is the rate at which a product should be completed to meet the demands
of maintenance
which is used
of the customers. For example, if the weekly demand for ACs is 500, then 500 ACs
for maintenance should be produced in a week (considering only the working hours). Takt time is
prevention. calculated as:
Total Available Production Time

Takt Time =
Average Customer Demand
Benefits of Takt Time are as follows:

It ensures that the business capacity is planned and is utilised optimally.
It ensures that customer demands are met.
It helps in delivering the right product (RP) at the right time (RT) in the right
quantity (RQ) to the customer.
It highlights various issues, such as capacity, synchronisation, quality, etc.
It maintains a consistent flow of production.
It standardises the work processes.
It increases efficiency.
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It decreases training time.

It minimises the overtime.
Quick TIP
Customer It helps in reducing errors and increasing the quality.
demand = Number
of units required by
customers per unit 4.2.12 SMART GOALS
of time period. Here, Every business has certain goals which help provide a sense of direction, focus
time period may
be minutes, days, and motivation towards the mission. The SMART goals technique helps in setting
weeks, months, and of goals. The SMART goals concept was first introduced by George Doran, Arthur
so on. Miller and James Cunningham.
SMART is an acronym that stands for Specific, Measurable, Achievable/Attainable,

Realistic/Relevant and Timely. Specific means a goal that should be clear and well
defined. Also, any person related to the organisation should be able to understand
it. Meaurable goals are those goals whose extent of achievement known. Attainable
goals include challenging goals, but they must be achievable. A goal is considered
realistic if it can be accomplished. Time bound means there should be a specific
timeline for achieving the goals.
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4.2.13 BOTTLENECK ANALYSIS
In a bottleneck analysis, the organisation studies the process thoroughly to
understand the reasons behind the imbalances in it. Imbalances lead to delays,
inventory build-up, and process stoppages. A study of process helps in finding out
where the process is constrained and the root causes of these contraints. When any
constraint is found and fixed, this process leads to improving the bottomline of the
organisation and helps serve the customers in a better manner.
Bottlenecks are the major reasons for the delay in production, and, hence, the
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budget goes beyond the overboard. Also, the whole process becomes uncertain.
Bottlenecks can be identified by visualising or mapping process. Some major
benefits of conducting a bottleneck analysis are as follows:
Identifying the cause of bottleneck
Streamlining the workflow effectively
Eliminating the wastes
Improving production level
Helping in effective decision making
4.2.14 CONTINUOUS FLOW

Quick TIP
An organisation Continuous flow or one-piece flow or one-piece continuous flow is a lean
may not be having philosophy which suggests that an organisation should process only what the
one-piece flow. If it customers want in terms of the quantity. In a continuous flow system, one-piece
is not being able to work is processed on various operations in a sequential manner within a work cell.
achieve one-piece
flow, it should This method is opposite to the batch-manufacturing processes, wherein several
strive to achieve
two-piece or three- units of a product are moved from one stage to the next stage simultaneously. In
piece flow. continuous flow, the production time equals the lead time as the product does not
have to wait in any queue.
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Some of the benefits of continuous flow are as follows:

It improves and builds the quality because the operators at each process can
usually find and fix the errors as soon as they are encountered.
It increases the flexibility of scheduling the equipment for another production
due to shorter lead times. When equipment is dedicated to one production
line, there is less flexibility of being scheduled for other production line.
However, due to use of continuous flow production, the lead time is
shortened and the equipment can be dedicated to some other production
line according to changing customer demand. It means that it becomes easy
to change over to a new product mix.
It increases the productivity.
It helps in freeing up space because in a cellular one-piece production, all the
equipment are placed in close proximity to each other.
It improves safety.
It reduces costs.
It brings down the inventory levels.
It improves on-time delivery to the customers.

4.2.15
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POLICY DEPLOYMENT (HOSHIN KANRI)
Hoshin Kanri is a Japanese term made from two words ‘Hoshin’ and ‘Kanri’. In
English, Hoshin means direction and Kanri means management or control. When
it is meaningfully translated in English, it means policy deployment. Hoshin
Kanri is a lean tool used by an organisation to ensure that its strategic goals lead
to progress. Also, constructive activities are carried out at various levels of the
organisation. Following this lean tool helps eliminate waste that might occur due
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to miscommunication and poor direction.
Policy deployment ensures that all the employees work in the same direction at the
same time. This is achieved by aligning all the three levels of management with each
other. It means that the corporate-level strategic goals, the middle management’s
tactics and the operations carried out by the lower management must be aligned to
each other. Hoshin Kanri requires the 7-step process as shown in Figure 7:
1. Establish Organisational Vision
2. Develop Breakthrough Objectives

Catchball
3. Develop Annual Objectives
4. Deploy Annual Objectives Self-Diagnosis
5. Implement Annual Objectives
6. Monthly Review PDCA
7. Annual Review
Figure 7: Hoshin Kanri Planning

Source: https://kanbanize.com/lean-management/hoshin-kanri/what-is-hoshin-kanri/
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Some of the important benefits of Hoshin Kanri are as follows:

N ote It leads to effective employee hiring and development.
Kaizen is an It increases the awareness of employees for the processes.
integral part of
Hoshin Kanri. It leads to consensual decision making.
It increases the level of ownership and engagement.
It helps in developing breakthrough objectives and solutions.
4.2.16 AUTOMATION (JIDOKA)

In the 1990s, Sakichi Toyoda invented a textile loom which stopped working when
any thread broke. At that time, the concept of Jidoka or automation came into the
limelight. However, it also had an additional connotations of being humanistic.
For this reason, Jidoka is also called human automation or automation with a
human touch.
Now, machines are used these days which are automated and they stop their
ongoing operations whenever something goes wrong or when there is an abnormal
condition which may require fixing. Usually, automated machines have a warning
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light or a signaling device or a siren which alerts the machine operator of the
abnormal condition.
Figure 8 shows an automated assembly line using Jidoka:

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Figure 8: Automated Assembly Line Using Jidoka

Source: https://www.linkedin.com/pulse/20141012024851-148241079-jidoka-second-pillar-of-lean-not-
applied-effectively-by-pharma-giants
4.2.17 GEMBA (PLACE OF ACTION)

Gemba refers to the place where value is created in business, and it becomes a
popular management term. In Gemba, managers routinely visit the place of work
called Gemba walk. By visiting and observing the work floor, they are able to gain
valuable insights into the work flows. It helps in uncovering flow problems and
finding ways to resolve them. In addition, this also helps them in learning new ways
of supporting the employees and finding ways for improvement. Gemba can be
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used in many areas of management, but it is commonly used in the manufacturing

process. Gemba can also be used in construction sites, retail, sales, etc.
Gemba as a lean tool has three important elements:

Taking the Gemba walk: It helps reveal the wasteful activities.
Asking questions: Looking for value stream in the workflow and trying to
find the problematic areas.
Showing respect to people: Gemba walk is not to show the authority, but
to work together, and find the problems as well as their solutions together.
3. In a __________ system, one piece of work is processed on various

operations in a sequential manner within a work cell.
S elf
A ssessment 4. Takt time is calculated by dividing:
Q uestions
a. Total available production time by average customer demand
b. Average customer demand by lead time
c. Lead time by cycle time
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d. Sum of lead time and cycle time by total available production time
5. Which term was first used and phrased by a Japanese organisation
Denso?
6. In a Kanban environment, the number of WIP should be restricted.
(True/False)
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One day, observe all the activities that you do in a day. Note these observations
in a chronological order on a sheet of paper. Now, list the wasteful activities
A ctivit y 1 that you did that day and mention ways in which you could have avoided the
wastes and done some other useful activity.
4.3 SUMMARY
A lean tool is a generic term and it refers to any device, application, process,
technique, method or procedure that an organisation can use to remove waste and
create value for its customers. A large number of organisations are now starting to
follow the lean principles, practices and tools. It has found unequalled acceptance
from manufacturing organisations. Lean management approach includes an
extensive range of principles and tools which help in identifying and removing
the wastes, and, hence, delivering value to the customers.
Organisations are not adopting lean only because it has a growing influence. They
are adopting lean because lean management practices and tools have proved
themselves to be extremely beneficial in terms of improving quality, faster and
efficient delivery, improving visual management, eliminating problems, etc.
There are more than 50 lean tools, like 5S method, bottleneck analysis, continuous
flow, Gemba, Hoshin Kanri, Jidoka, JIT, Kanban, etc., that an organisation can use.
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The lean tools are often interrelated and are advantageous to the overall process
improvement and production facility.
4.4 KEY WORDS

Lean management: A process of continuous improvement which includes
an extensive range of principles and tools.
Jidoka (Quality): An automation in equipment which enables workers to
improve the quality of production.
5S Workplace Standardisation: It is a structural system which focusses on
organising business operations by eliminating the waste.
Root cause analysis (RCA): It is a systematic process used for identifying the
root causes of problems.
Total Productive Maintenance (TPM): It is a programme for maintaining
and taking care of equipment and plants for achieving operational efficiency.
Gemba walk: It refers to taking a walk through the floor and observing the
work in action.
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4.5 CASE STUDY: IMPLEMENTATION OF 5S AT, HARSH POLYMERS,
MAHARASHTRA
Most of the lean tools are largely restricted to large scale industries. In context
of India, small-scale industries play a vital role in economy and employment
generation. However, most of the small-scale industries run on traditional models
and do not use modern process and quality improvement methodologies such
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as Lean and Six Sigma. If lean and other improvement methodologies can be
effectively implemented in small-scale industries, the it can be extremely beneficial
for the Indian economy.
Certain lean tools such as 5S that can be easily and inexpensively implemented
in small scale industries. Implementation of 5S helps to improve productivity,
safety, efficiency and reduce waste. 5S may also be used in combination with other
lean tools such as Kanban, Kaizen, Total Preventive Maintenance or Total Quality
Management
Harsh Polymers was established in 2013 and it manufactures items, namely woven
sacks, salt bags, sugar packing, BOPP Bags and Loop Bags. The organisation made
great progress in a short span of time but it was still facing certain following
problems:
Improper resource organisation
Low productivity
Improper utilisation of storage space
A lot of time was required in searching and selecting tools
Unwanted materials
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No defined space for storing rejects and unwanted materials

Improper communication between the management and employee
Non-utilisation of modern techniques
The management of the organisation decided to implement 5S. For this, they studied
the layout of the organisation. They surveyed the organisation’s production floor
and also discussed various things regarding the floor employees and marketing
personnel. The 5S technique was implemented by following steps:
1. Seiri/Sorting: Earlier, the scrap material was stored in a haphazard manner
at various places on the floor and this scrap occupied maximum space. Scrap
items included cut bags, waste bobbins, broken parts, etc. All the scrap and
goods materials were mixed. In Seiri implementation, all the useful and
scrap items were separated. All the scrap was placed at one location which
was named as scrap yard. Figure A shows the production floor before and
after Seiri implementation:
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Figure A: The Production Floor before and after Seiri Implementation
Source: http://troindia.in/journal/ijcesr/vol4iss8part4/23-29.pdf
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2. Seiton/Set in Order: In Seiton implementation, all the useful materials were
arranged according their respective sizes. Different items, namely baskets,
bobbins, loom wheels, etc., were arranged according to their sizes. It was
observed that a lot of time of the workers was wasted in searching and
selecting tools. Seiton implementation helped to reduce search and select
time by 20- 25 %. All the tools and raw materials were placed in a proper
manner. Figure B shows the production floor before and after the Seiton
implementation:
Figure B: The Production Floor before and after Seiton Implementation
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3. Seiso/Shine: In Seiso implementation, all the workplace and fixtures were

cleaned. This step was carried out along with the sorting step. All the
materials were to be moved and all the work areas were to be cleaned. All
the tools were also cleaned and kept properly. Earlier, the air conditioner
pipe was leaking. It was also fixed. Figure C shows the production floor after
Seiso implementation:
Figure C: The Production Floor after Seiso Implementation

IT Source: http://troindia.in/journal/ijcesr/vol4iss8part4/23-29.pdf
4. Seiketsu/Standardise: In the Seiketsu implementation, a standardised

procedure was established and an audit sheet was prepared. Also, clear
instructions were laid out for maintaining the above three S. Workers were
instructed to place equipment at its place clean the space regularly after use
and maintain workplace etiquettes. Proper readings were to be recorded
in the audit sheet. It was also required that all the above three S to be
implemented at production and office area.
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5. Shitsuke/Self-discipline and sustain: All the employees, storekeepers,
managers and engineers co-operated with each other in order that they are
able to sustain the above 4 S in the long-run.
Due to 5S implementation, Harsh Polymers felt that their production work
was streamlined and were done in an organised fashion. The production
time was improved and the available space was being used effectively.
QUESTIONS
1. What was the biggest issue facing Harsh Polymers? Do you think that lean
was the right approach for dealing with this issue? Explain.
(Hint: Biggest issue facing Harsh Polymers was improper use of floor area.
Yes, lean was the right approach.)
2. Harsh Polymers is a small scale organisation and cannot afford to implement
any expensive tools. Which tools, according to you, can this organisation use
without hurting its finances?
(Hint: Kanban boards, JIT, Kaizen, etc.)
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1. What is the main goal of lean management?
Exam Check
a. Decrease in inventory b. Flow value to customers
c. Maximise on resources d. Increase the safety stock
2. What is the advantage of Kaizen?
a. Increase in productivity
b. Factories need less space
c. Increase in manufacturing time
d. Employees become loyal
3. Which one of the following sentences is correct as per lean philosophy?
a. Producing a greater variety of goods
b. Buying the latest equipment to increase output
c. Holding very low stock levels
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d. Making smaller quantities of goods than previously
4. From which language has the word ‘Takt’ been taken?
a. German b. Chinese
c. Japanese d. Hindi
5. In continuous improvement, the main focus is on eliminating _________.
a. Errors b. Waste
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c. Flexibility d. Safety
6. In 5S system, what does sorting mean?
a. Only have the needed tools and resources in the area
b. Everything has a place
c. Keep it clean
d. Ensure everyone is doing it the same way
7. In lean methods, the word ‘value’ is used in respect of
a. Investors b. Customers
c. Management d. Team members
8. Which are the 5 ‘W’s to be taken into account during the process of root cause
analysis?
a. Who, what, when, where, why
b. Who, why, when, why, how
c. Why, why, why, why, why
d. Who, why, why not, when, what
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9. What does the Hoshin Kanri aim to achieve?

a. The control of workers’ actions and performance
b. Ensuring business targets are met
c. Alignment of actions with strategic objectives
d. Formulating an effective strategy
10. Which of the following sentences describes Takt time?
a. The time it takes to make a standard product
b. The rate that components need to be supplied to the production line
c. The time of equipment changeover
d. The integration of operations to customers’ demand
11. Which of the following is a form of waste used in a manufacturing
organisation?
a. Downtime b. Uptime
c. Downtown d. Uptown
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12. The amount of time taken to complete an operation is called __________.
a. Cycle time b. Takt time
c. Just in time d. Lead time
13. Which of the following is not a lean principle?
a. Focussing on value from the customer’s viewpoint
b. Eliminating steps that do not add value
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c. Performing value-creating steps
d. Training within industry
14. Where should a person go to understand the systems and processes to learn
the facts about work?
a. Warehouse b. Gemba walk
c. Plant floor d. Supply chain
15. Which activity is not a part of the lean manufacturing process?
a. Documenting policies b. Specifying value
c. Aiming for perfection d. Creating a flow
16. Application of lean tools helps organisations in becoming ________ and
innovative.
17. The lean tools work towards a single _________ of removing waste and
creating value for customers.
18. The Plan-Do-Check-Act (PDCA) cycle is also called the _________ wheel.
19. The PDCA cycle acts as a cyclical process and it has a goal of improving on
each _________.
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20. Poka-Yoke technique should be used in an environment where a _____ can

occur or anything could go wrong in the total system.
21. _________ helps visualise the workflow and the process along with the actual
work happening through that process.
22. The manufacturing sectors are taking the help of lean management systems,
and the importance of lean management tools has been increasing over the
years. (True/False)
23. Lean management tools do not make employees feel important and the part
of the system as they are not able to contribute their efforts towards the
organisation. (True/False)
24. It is not important to standardise the new methods and the employees need
to be the part of setting the new standards. (True/False)
25. Overall Equipment Effectiveness (OEE) is considered as a gold standard for
measuring the manufacturing productivity. (True/False)

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1. Which of the following options is mapped wrongly?
a. Visual control of a process – Identification of the problems
b. JIT – Reduced lead time
c. Root Cause Analysis – Problem solving
d. Lean – Improved employee morale
2. Which of the following options is correct?
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List I List II
i. Seiso A. Sustain
ii. Shitsuke B. Shine
iii. Seiri C. Sort
a. i – A; ii – B; iii – C
b. i – A; ii – C; iii – B
c. i – B; ii – C; iii – A
d. i – B; ii – A; iii – C
3. You are told that availability is 70% and performance is 90%. Also, you are
told that the number of goods that were supposed to be produced is 1,000,
but the quality department has reported that there are 20 defective products
which cannot be used. Calculate the OEE%.
a. 61.74% b. 63.01%
c. 61.95% d. 62.9%
4. Which of the following tools is used in lean for quality assurance?
a. Process map b. Poka-Yoke
c. RCA d. JIT
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5. Carefully observe the following image:

Source: https://www.allaboutlean.com/
This image is indicative of the use of which lean tool?

a. 5S b. Continuous flow
c. Jidoka d. Kaizen
4.8 ANSWER KEY

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Topic Q. No. Answer
Lean Management Tools 1. value
2. False
Types of Lean Management Tools 3. continuous flow
4. a. Total available production time
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by average customer demand
5. Total Productive Maintenance
(TPM)
6. True
Q. No. Answer
1. b. Flow value to customers
2. a. Increase in productivity
3. c. Holding very low stock levels
4. a. German
5. b. Waste
6. a. Only have the needed tools and resources in the area
7. b. Customers
8. c. Why, why, why, why, why
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Q. No. Answer
9. c. Alignment of actions with strategic objectives
10. d. The integration of operations to customers’ demand
11. a. Downtime
12. a. Cycle time
13. d. Training within industry
14. b. Gemba walk
15. a. Documenting policies
16. competitive
17. goal
18. Deming
19. iteration
20. mistake
21.
22.
23.
IT
Kanban
True
False
24. False
25. True

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Q. No. Answer
1. c. Root Cause Analysis – Problem solving
2. d. i – B; ii – A; iii – C
3. a. 61.74%
4. b. Poka-Yoke
5. c. Jidoka
@ SUGGESTED BOOKS
Gopalakrishnan, N. (2010). Simplified Lean Manufacture. New Delhi: PHI
Learning.
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E-REFERENCES
What is Kaizen (continuous improvement)? - Definition from WhatIs.
com. (2019). Retrieved 19 July 2019, from https://searcherp.techtarget.com/
definition/kaizen-or-continuous-improvement
Six Sigma –> Lean Six Sigma – iSixSigma. (2019). Retrieved 19 July 2019, from
https://www.isixsigma.com/topic/six-sigma-lean-six-sigma/
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CHAPTER
5
WASTE IDENTIFICATION,
MEASUREMENT AND ELIMINATION
Table of Contents
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Chapter Objectives
Introduction
Learning Outcomes
5.1 Concept of Waste in Lean
5.1.1 Identification of Waste
5.1.2 Causes of Waste in Processes
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5.1.3 Value Addition to Work
5.1.4 Power of Observation
5.1.5 Three Types of Waste
5.2 Areas of Waste
5.2.1 Overproduction: Identification and Causes
5.2.2 Excess Inventories: Identification and Causes
5.2.3 Defects: Identification and Causes
5.2.4 Extra Processing: Identification and Causes
5.2.5 Waiting: Identification and Causes
5.2.6 Motion: Identification and Causes
5.2.7 Material Movement: Identification and Causes
5.2.8 Underutilisation of People: Identification and Causes
5.2.9 Behaviour: Identification and Causes
5.3 Waste Measurement Techniques
5.4 Elimination of Wastes
Table of Contents
5.5 Summary
5.6 Key Words
5.7 Case Study
5.10 Answer Key
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Waste Identification, Measurement and Elimination
 Describe the concept of waste in lean

 Explain the causes of waste
 List and discuss the specific areas of waste
 Explain the waste measurement techniques
 Discuss ways to eliminate waste
INTRODUCTION
Read In the previous chapter, you studied about the lean management tools. The chapter
also described various tools of lean management to improve the processes, remove
Pre-read Connect
the wastes and improve the bottom line.
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Nowadays, organisations are focussing on improving their processes by
eliminating or reducing the total waste and minimising costs related to wastes.
They want to remain competitive, and provide high-quality goods and services
to customers by becoming leaner. They wish to improve productivity by doing
the right things better and sticking to the practice of continuous improvement
of processes. Therefore, for achieving growth, it is necessary to adopt certain
productivity improvement tools and techniques, i.e., lean tools and techniques
which help organisations in becoming more flexible and profitable.
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Organisations now focus on the aspects, namely quality development, process
improvements, pull production, continuous improvement, value stream
management, empowerment of workers, etc. The principle concept of lean
philosophy relates to waste reduction and elimination. Waste needs to be eliminated
from the production processes, human resources, design activities, distribution
activities and inventory.
This chapter relates to the important concepts related to waste, including

identification of wastes, causes of wastes, different areas of waste, waste
measurement techniques and the elimination of wastes. Also, this chapter explains
that the main goal of any lean system is the elimination of waste because customers
pay only for value addition and not for the waste.
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LEARNING OUTCOMES
Associate the concept of wastes as it applies to different manufacturing or
service sectors
Develop a keen eye which looks forward to find out the causes of wastes
Focus on consciously developing the power of observation
Advise on the application of lean tools in specific manufacturing
environments
5.1 CONCEPT OF WASTE IN LEAN

In the study of lean management, waste is defined as any piece of work that does
not add value for the customer. Muda, the Japanese word, refers to waste. In a lean
environment, it is important to identify various types of work and categorise as
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they are value-adding or non-value-adding.
According to Toyota, waste is anything other than the minimum amount of equipment,
materials, parts and working time absolutely essential to production.
Another way to define waste is as any expense or effort that is used, but which
does not transform raw materials into a product that a customer would be willing
to pay for. Any action or step in a process can also be considered as waste if it does
not add value for the customer.
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Taiichi Ohno of Toyota Production System (TPS) developed the concept of the
seven wastes. He categorised manufacturing wastes into seven categories which
are as follows:
1. Transportation (T)
2. Inventory (I)
3. Motion (M)
4. Waiting (W)
5. Overproduction (O)
6. Over-processing (O)
7. Defects (D)
It is easier to remember these seven wastes by using an acronym TIMWOOD.
In the 1990s, another waste called the eighth waste was identified. This waste
is related to the unutilised skills, talent and ingenuity of employees. This waste
was not originally the part of the original TPS. The success of any organisation
depends on its employees. This waste occurs when the knowledge and expertise
of employees are not utilised properly. Moving further in this chapter, we will
discuss each component of TIMWOOD in detail.
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It is a core principle of lean methodology to remove waste or Muda from the

manufacturing system. In the first chapter of this book, you studied about the
three main enemies of lean which are muda, mura and muri. Waste is certainly
the biggest enemy of lean. Waste has become a significant area for improvement.
Mura is related to unevenness and Muri is related to overburden.
A lean management system strives to eliminate wastes and improve the production
process. Waste results in reduction of profit margins, reduction in quality, increase
in cost, and decrease in staff and customers’ satisfaction. Elimination of waste
results in high-quality goods and services, improved delivery times, satisfied
employees and customers, and competitive prices.
5.1.1 IDENTIFICATION OF WASTE

An important principle of lean is striving to achieve the operational excellence by
identifying and eliminating wastes. An important concept related to identification
N ote of lean is value addition.
A customer
usually pays for All the steps in a process and all the acitivities that are involved in production of a
value-addition. product can be divided into three categories as follows:
If the customers
maintain that what
is being provided
to them are not
something that
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1. Value-Added (VA)
2. Essential Non-Value-Added (ENVA)
3. Non-Value-Added (NVA or waste)
they would be
willing to pay for, The steps of a process in which some value is added to a product or service for the
then no value is
being provided to customers are called Value-Added (VA) steps. When resources are spent on such
customers. activities which help in generating the revenue, it is valuable. For example, in the
process of extracting aluminium from bauxite ore, each step adds some value. This
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is shown as:
Bauxite ore → alumina → smelting of aluminium from alumina
ENVA activities are those activities which do not add any value to the product or
service, but are necessary for operating a system or equipment. ENVA activities
might be required for meeting third-party obligations. It is difficult to remove
such activities in the initial stages. However, they may be reduced in the long
Important run by becoming lean and changing the equipment or processes. For example,
Concept
governmental authorities’ activities’ or the activities of regulatory agencies are
VA activities should classified as ENVA activities.
be optimised and
ENVA activities
NVA activities are those that do not add value to the product or service.
should be
minimised, whereas Consequently, they bear no impact on customers’ satisfaction. For example,
NVA activities must reviewing a document that has already been proofed or obtaining multiple
be eiminated. approvals for sending a sample, etc., are NVA activities.
Identifying and removing wastes are the key to delivering value to the customers.
Wastes are costs for an organisation, whereas the value addition for customers
is a source of revenue for an organisation. To derive the maximum value at the
least possible cost, it is necessary to eliminate wastes or NVA activities from the
process.
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5.1.2 CAUSES OF WASTE IN PROCESSES

There are multiple sources of wastes in the processes, but the major sources are as
follows:
Unnecessary process steps: In some processes, there are certain activities
which do not add value, and, hence, are not needed. These could be in the
form of unnecessary steps, a number of reviews, unnecessary quality checks,
etc.
Delays in a process: At times, processes need to be stopped or halted. This
results in waiting time which does not add value.
Idle resources and inventories: Idle resources are the source of cost. Managing
and storing the idle inventory and resources also requires physical space,
manpower, time and funds that can be used for more value-added tasks.
Overproduction: Producing goods in quantities more than they are required
is wasteful. Overproduction uses resources that could have been utilised in
better and value-added activities.
Unnecessary movement of staff: Activities which involve too much
movement of materials, information and people do not add value to the
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work. These activities consume time and resources. The work should be
better organised if frequent, unnecessary movement can be eliminated.
Rework: Repeating a task or an activity is a waste of time, effort and incurs
costs.
Underutilisation of skills: When the actual potential and skills of employees
are not used, it leads to waste. If the staff is sitting idle and not using their
skills and knowledge for the benefit of the organisation, then it is considered
as a waste because such idleness does not provide value to the customer or
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to the betterment of the organisation. Such wastes can be avoided by clearly
defining and standardising the processes. Also, value stream mapping and
flowcharting can be used to identify non-value added steps within the
process.
5.1.3 VALUE ADDITION TO WORK

In any work, value-added steps are those where something is added to a product
or service for which the customers would be willing to pay. If customers are not
willing to pay more for something additional, then it is not adding any value to
the product or service.
To add value to a work, there are three requirements are as follows:

Identify the step that would add value such as increase or better the
functionality of the product or service
Customer should be willing to pay for the value addition
Value addition step should be done in the right manner the first time
Value for the customers can be defined in the following ways:
The quality of the product or service should satisfy the needs of the customers.
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Value for a customer is when the customers get timely delivery. Lower lead
time helps an organisation remain competitive.
Value that is added in a product or service should be done in a reasonable
manner so that the customers are ready to pay an extra amount but do not
feel that they have paid an exorbitant amount.
5.1.4 POWER OF OBSERVATION

The process of observation is making us of our different senses, i.e., sight, smell,
hearing, touch or taste for gathering some information or understanding our
surroundings. In the olden era till before the 1800s, technical tools were available
but were limited. The Internet and computers were not available. Modes of
communication and transportation were limited and inaccessible for a larger part
of the population. All this meant slow sharing of knowledge. Such circumstances
meant that there was an advancement in science and technology but at a slow
rate. In addition, the advancements were a result of keen observation and
experimentation only.
There are two kinds of observations. Qualitative observations are descriptions

collected as a result of human senses and they do not contain numbers. Quantitative
numbers.
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observations are descriptions based on measurements and counts which include
Nowadays, organisations and people are losing their power of observation. This
is an extremely disturbing trend. Organisations are suffering from a condition
in which the power of observation of the employees and management is almost
non-existent. This condition is termed as organisational cataract. Organisational
cataracts usually lead to the following conditions:
Managers fail to identify the sources of waste such as rework that is caused
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due to improper scheduling.
Employees are usually focussed on meeting their targets rather than
observing wastes, and discussing how the wastes related to their work can
be eliminated.
Managers and employees do not investigate and analyse their observations.
Investigating observations may reveal the causes of problems.
It is of utmost relevance to have the power of observation to create a lean and
learning organisation. In a lean environment, power of observation ensures that
the employees learn to see the waste and variation. Power of observation develops
eyes that know what to look for.
Taiichi Ohno, from the TPS, had an interesting method of developing observational
skills in people. He used to make students visit the production area where
they were asked to observe what was happening and find ways to improve the
operations. He also suggested to keep asking the 5-Why questions. This process
helps improve the flow of the production process and prevent the seven forms of
waste. Ohno emphasised on two things:
Observing the shop floor
Determining ways for continuous improvement
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The process of observation helped team members gather the information and
data. Also, they were able to discuss their finding and provide the appropriate
corrective actions.
5.1.5 THREE TYPES OF WASTE

The three enemies of lean are also referred to as 3Ms. Muda refers to wastes within
a process or production activity. Mura refers to unevenness in the workflow. Muri
refers to the overburden of equipment or operators.
Let us now discuss the 3Ms in detail.
Muda
Muda is any activity or process that does not add value to the final product, and,
hence, leads to waste of time, money and resources. You have already studied that
Muda or waste has been classified into seven categories, i.e., TIMWOOD.
Further, Muda has been divided into two categories, namely Type 1 Muda and
Type 2 Muda. Type 1 Muda is ENVA-type wastes in the form of activities that are
required due to statutory or regulatory requirements. Type 2 Muda is the NVA-
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type waste in the form of activities which are non-value-adding, and, hence, need
to be eliminated.
Muri
Muri means overburdening of employees or processes. Muri can result from
Mura and other failures within a system. Also, excessive removal of Muda (waste)
from the process may lead to Muri. In addition, lack of training, unclear methods
of working, use of wrong equipment and tools or breakdown of machine or
equipment can also lead to Muri.
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Muri can also result due to extra demands, which leads to overburdening of
the system. Muri occurs when there is an excessive demand for goods because
machines and the operators are totally occupied with the work, and work is being
done using 100% capacity. At times, the machinery and people are pushed through
their limits which may lead to breakdowns, employee absenteeism, illness, etc.
It is necessary for the work processes to be distributed in an even manner and

the work should be standardised. There should not be any overburdening of
the machines or employees. OEE can help prevent Muri and improve systems.
One may also use preventive maintenance and autonomous maintenance. In
preventative maintenance, the machine is kept in operating condition to prevent
failures by means of inspection and detection. In autonomous maintenance, the
operators make it a routine to perform important maintenance tasks on a machine.
Muri has also been identified with employee absenteeism.
Mura
Mura means unevenness or non-uniformity. The seven wastes of Muda exist due
to Mura. In other words, Mura leads to Muda. The main objective of the lean
production system is to have a uniform workload so that there is no unevenness
or accumulation of waste.
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Mura refers to the waste of unevenness or variability. It depends on the situation

where Mura can exist in more than one condition. Mura is the waste that exists
because of some resources being overburdened, while some are being underutilised
or are in waiting for others or alternating over time between being overburdened
and underutilised. The mura occurs due to the absence of standardisation of the
processes. Some machines and equipment may be overburdened because of being
overutilised and some products may be going through over-processing.
Unevenness within the processes can be identified by:

Using the Kanban board for visualising the workflow
Utilising the total flow diagram for measuring the process stability
To identify unevenness in the process and the systems, it is necessary to visualise
the workflow. Kanban method which maps the workflow on board and columns
shows each step within the system. It gives a comprehensive understanding of the
system and the amount of work which has been accumulated.
1. Another way to define waste is as any expense or effort that is expended,

but which does not transform the _______ into the product that the
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A ssessment
Q uestions
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customers would be willing to pay for.
2. Muri can also be caused by Mura. (True/False)
5.2 AREAS OF WASTE

Eliminating waste is necessary for stimulating growth and increasing profits of any
business. It is well known that the main focus of lean systems is the elimination of
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waste from the processes. Lean manufacturing helps organisations in increasing
their productivity and reducing costs. All this can be achieved by identifying the
root cause of the problems and eliminating muda.
The eight wastes are als o known as the areas of waste. To eliminate wastes, it is
important to identify the areas of waste, understand what kind of waste is there
and where it is found.
Once the areas of waste are identified and waste is removed, the systems and
processes get streamlined which result in achieving objectives. This helps
organisations save time, money and effort. Eliminating waste is a difficult and
time-taking task, but it helps in improving the productivity and the profits. Let us
now discuss how an organisation can identify the wastes and their causes.
5.2.1 OVERPRODUCTION: IDENTIFICATION AND CAUSES

Overproduction means manufacturing of goods at a faster rate than it is actually
needed. This leads to an increase in costs, hampered flow of resources, materials
and poor-quality products. TPS used ‘Just in Time’ (JIT) method for production
wherein products were made just as needed. The process of overproducing is
referred to as ‘Just in Case’ Which means that the products are made in excess
just in case they may be required. Excess production of goods leads to increased
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cycle time and storage costs. Also, it is not easy to look for defects in such cases.
The production which is not linked with the demands of the customers leads to
overproduction. Overproduction may be caused due to the following reasons:
Poor forecasting
Ineffective flow of processes
Poor production schedule
The problem of overproduction can be avoided by:
Applying JIT model of production
Scheduling production in line with the demands of customers
Improving the machine and equipment capability
5.2.2 EXCESS INVENTORIES: IDENTIFICATION AND CAUSES

Excess inventory can cost the time, cost and resources of the organisation. Excess
inventory refers to the stock of finished goods that are stocked up in quantity far
more than required, and this quantity leads to excess inventory. It is necessary to
produce goods and services as and when the customers require. For this, using
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Just in Time (JIT) is beneficial.
Inventory waste, if not managed effectively, can prevent detection of problems
related to production. It is because problems and defects take time for accumulation
before they can be detected. Removing of defects also takes time. It is very
important to understand the areas where inventory waste is generated in order
to control and reduce inventory waste. Some of the important causes of inventory
waste are as follows:
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Overproduction
Ineffective demand forecasting
Delays between process flows
Over-processing and ineffective system of monitoring
Inventory defects
Ineffective supplier management
Excess inventory wastage can be reduced by:
Having an effective monitoring system
Emphasising on the pull system of production where the downstream
processes produce goods as per the demand from upstream processes
Preparing a production schedule and using techniques like Kanban
Identifying restrictions within the process and fix them for reducing inventory
5.2.3 DEFECTS: IDENTIFICATION AND CAUSES

Defects can be defined as deviations between the requirements of the customers
(required specifications) and actual product functioning. Apart from the cost
incurred on scrap, there are various costs that are not visible.
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Cost of defects includes cost concerned with wastes related to rescheduling

materials, paperwork, problem-solving, transportation, extra materials, rework,
transport, increased cycle times, delivery failures and loss of customers. All these
situations require to rework and the process needs to be reviewed. Apart from
this, there is always a risk of defective products being sent to customers which
leads to a loss of customers and profits.
It is not possible to remove the defects entirely, but managers can monitor and
keep the track of the processes and systems. This helps in identifying the causes
of defects and improving the system. Defects may be caused due to the following
reasons:
Ineffective processes and documented procedures
Poor training plans
Absence of robust control of the system
Ineffective control mechanisms
Inferior inputs and materials
Defects can be reduced by:

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Working at Standard Operating Procedures (SOPs)
Providing regular training to employees and assessing the same
Having a robust quality control mechanism
Using lean methods, such as Poka-Yoke for identifying defects earlier in the
process
5.2.4 EXTRA PROCESSING: IDENTIFICATION AND CAUSES

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Extra processing or over-processing adds value to the products, which incurs
additional costs but this additional value is not actually required by the customer.
Extra processing involves extra cost, time, resources and materials along with the
wear and tear of the equipment in use.
Over-processing lowers the efficiency of the operators as they may be working on

processes which result in waste of time which they could have utilised in other
activities. Over-processing means working on the same process again instead
of making it right the very first time. Over-processing can be caused due to the
following reasons:
Excessive report generation
Multiple approvals
Data re-entry and duplication
Lack of standardised practices
Ineffective communication
Complex and heavy equipment
Customer need not be defined properly
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Over-processing can be reduced by:

Standardising and making the processes easier
Using flow-charting and VSM for identifying steps which are non-value-
adding
Reducing the cycle time by removing non-value-added steps
5.2.5 WAITING: IDENTIFICATION AND CAUSES

Waiting refers to the act of doing nothing and idling around waiting for an
earlier process to complete. Waiting is also associated with the time wasted while
a machine is down. The operators spend time idling around since they need to
wait before the next process starts. This is a waste of time and energy because
the customer does not pay for the waiting time. This adds to the extra cost for the
business and it invariably brings down the profits of the company in the long run.
Waiting or variance in production is a result of ineffective management. It results

in excess inventory and overproduction. Some of the reasons for waiting are as
follows:
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Downtime of the machinery or system
Poor resource planning
Unplanned allocation of work
Insufficient workforce
Ineffective communication methods
Insufficient capacity
Lack of proper instructions
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Waiting for the right equipment

Waiting can be reduced by:
Effective scheduling and planning for the workforce
Reducing the downtime of the system and processes
Effective maintenance of equipment
5.2.6 MOTION: IDENTIFICATION AND CAUSES

The waste of motion does not add value to work as it is not paid for by the customer.
Motion is the unwanted and unnecessary movement of employees or equipment
or tools from one place to another. The motions can be big or small, like walking
between areas of work or moving equipment between two places of work.
Some of the important causes of motion waste are as follows:

Improper office layout
Misplacement of tools
Inappropriate placement of resources
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Unnecessary motion leads to a decrease in work efficiency because employees

are busy with moving, searching, retrieving or lifting things rather than working
at assembling things. If people have to walk long distances carrying things
unnecessarily, then it will definitely impact their physical health. Also, wasteful
movements cost money and stress and do not add value to the product or service.
Wasteful motion can be reduced by:

Having a planned and effective layout
Minimising the movement of employees
Having the required tools and equipment within reach in the area of work
5.2.7 MATERIAL MOVEMENT: IDENTIFICATION AND CAUSES

Material movement (transportation) is the movement of inputs within the office
and manufacturing units. It involves the movement of materials and products
from one location to another. This excessive movement of goods does not add any
value to the product.
Under the TPS, most of the vendors and suppliers of Toyota were based near
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their plant. Due to this, goods were not required to be sent or transported for long
distances and there was no delay in delivery also. Also, damage to products was
minimised.
Causes of transportation wastes are as follows:

Inappropriate office/factory layout
Complex machinery set-up
No coordination of flow between upstream and downstream processes
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Large batch sizes
Number of storage locations/warehouses
Material handling of transportation wastes can be avoided by:
Analysing the flow of inputs from upstream to downstream
Improving scheduling of processes
Improving the layout of the office/factory
Utilising lean tools like spaghetti and swim-lane charts
5.2.8 UNDERUTILISATION OF PEOPLE: IDENTIFICATION AND CAUSES

Every organisation wants to have a dynamic and robust workforce where
employees are motivated and seek self-improvement. Also, the employees work
towards achieving the quality products for their clients. Underutilisation of
human resources by an organisation can lead to low profits and low morale of
the employees. It is necessary to use the knowledge and skills of the employees
to improve the processes in the system. Human resources are the people who
work with processes and can identify the problems. Employees also work towards
finding effective solutions for the problems.
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In an organisation, underutilised skills include designating employees in positions

below their skills, not providing any training to employees, poor incentives and
not eliciting feedback from the employees. When the employees are inadequately
trained and do not know how to handle equipment, and are not motivated enough,
this situation can lead to waste within the system.
Underutilisation of people can be reduced by:

Involving people at work for important decisions and ideas
Motivating and training are innovative that improve the quality of products
or services.
Involving employees to generate solutions for the issues and problems
effectively
5.2.9 BEHAVIOUR: IDENTIFICATION AND CAUSES

In this globalised world, lean philosophy can be used to develop new competencies.
In Japan, the executives at Toyota lead their workforce through various behavioural
changes which ultimately is essential for the development of a new culture and
knowledge. Lean principles help provide a framework for collecting information
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and data, and processing the same information to derive working knowledge. The
lean culture is using a systematic approach for identifying and eliminating the
waste through continuous improvements as per the needs of the customers. The
mindset and behaviour that help reduce confusion and chaos within a system are:
Clarity
Focus
Discipline
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Engagement
It is important for managers to display the sort of characteristics and behaviour that
will initiate and encourage the right thinking within the employees. Empowering
and respecting the employees for changing the processes is also required. The
behaviour that can help improve the workflow and derive rapid improvement of
an organisation’s processes include:
1. Trust: Create an atmosphere of collaboration and trust by empowering
employees and utilising their skills. Employees should be allowed to try and
learn.
2. Honesty: It is necessary to present the true facts irrespective of employees
feeling good or bad about it.
3. Listening attitude: All team members should be heard.
4. Respect for employees: It is necessary to give to employees the same level
of respect that one would expect from them. In an organisation, everyone is
important and adds value.
5. Being consistent: It is important to ensure right behaviour, ethics and actions
within the system.
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Lean leaders understand the importance of customers and adopt the following
practices:
Draw information regarding the needs and values of customers
Understand how a business satisfies the customer
Improve the effectiveness of the business
Work on problem-solving activities to find the root cause of the problem
with the right sources
Use lean methods such as Gemba walk
Ask open-ended probing questions
Understand that there is always room for improvement
Focus on customers’ changing requirements
Lean helps in creating a culture to sustain improvement by undertaking the
following activities:
Encouraging lean behaviour

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Learning from every failure
Working to improve standards
Obtaining results by effectively utilising resources
Improving how the organisation accomplishes results
3. _________ refers to the act of doing nothing and waiting for an earlier
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A ssessment 4. Motion sometimes leads to a decrease in lead time. (True/False)
Q uestions
5.3 WASTE MEASUREMENT TECHNIQUES

Waste can be eliminated effectively by using lean tools. Lean tools are used by
organisations to reduce cost, inventory and cycle time to improve the quality of
products. Lean manufacturing focusses on customers’ satisfaction by improving
quality, ensuring timely deliveries, reducing costs and removing product defects.
Lean manufacturing monitors the cost, quality, on-time delivery and cycle time for
a successful outcome of their efforts.
Overall Equipment Effectiveness (OEE) is used in manufacturing and operations.

It is an important metric which is used for providing a comprehensive report
related to processes, scheduling and quality concerns. This metrics helps evaluate
and indicate how effectively a manufacturing operation is utilised.
Apart from OEE, there are certain other lean metrics for evaluating the cost, quality
and schedule, which are important aspects of measuring and eliminating waste
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for an organisation. Some of the important metrics related to cost, quality and
schedule are discussed as follows:
Total cost: The total cost is evaluated by comparing the amount spent in the
current period on manufacturing against the last period’s total expenditure,
reveals whether the costs are reducing for achieving a better output as time
progresses. Once the expenditures are clear, resource allocation can be done
accordingly which can improve the output and reduce spending. A practice
of incremental elimination of waste from various departments helps in
significantly reducing waste, and hence the total cost for the company. Some
important cost metrics include cost savings and cost per product.
Total cycle time: Cycle time helps to calculate the time taken to undertake
the production of a product or component (time between the start of one
product’s process to the start of another similar product’s process on the
same machine). Lean manufacturing methods helps to assess the efficiency
of the process and determine the value of the value-added to the process.
Process cycle efficiency or Value Added Ratio is the amount of value-added time
in a process. It is calculated by using the following formula:
Timely delivery: Under delivery performance evaluation, the time taken
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between a customer’s request for a product and the actual delivery date
are evaluated. This evaluation reveals the ability of a manufacturer to meet
customer requirements on time. In lean manufacturing, when the cycle
times are reduced, delivery performance improves. Total delivery time
is calculated by using the total time. One unit of the product takes to go
through the entire process in a manufacturing process and the waiting times
in between different processes.
Total lead time = Sum of process lead times + Sum of waiting times
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Quality: Lean manufacturing stresses continuous improvement with
customers’ satisfaction. It works towards reducing product defects and
reworking on components, to lower costs for the end consumers. Lean
manufacturing techniques are used to eliminate waste in all forms, including
rework and waste.
Quality can be judged by assessing factors such as customers’ satisfaction,
rework, percent Complete and Accurate (C&A) and Rolling First Pass Yield
(or Rolling Throughput Yield).
Safety: Having safety measures for employees is critical for increasing
production and lowering costs. It is important to incorporate safety measures
in the production place. Lean methods help to remove waste, save time,
money and resources by reducing the number of injuries at the workplace.
5. __________ metric helps evaluate and indicate how effectively a

S elf manufacturing operation is utilised.
A ssessment 6. What is another term for process cycle efficiency?
Q uestions
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5.4 ELIMINATION OF WASTES

Waste elimination is one of the most effective ways for an organisation to increase
its productivity and profitability. In today’s global and competitive marketplace,
many organisations are incorporating the lean methods because of doing value
addition to their products and services.. For all organisations, goals of profit
maximisation and minimising wastes remain the same but they adopt different
lean processes tools and techniques for achieving these objectives. Processes
either add value or they remove waste to the production system. The process of
eliminating waste and adding value helps organisations in increasing profits.
For eliminating waste, it is necessary to understand what kind of waste is present

and where it exists. Whatever is seen as being unproductive or not adding value
for which a customer would not be willing to pay for is considered as muda or
waste. Different organisations produce different types of wastes, but the typical
wastes found in different manufacturing environments are quite similar. The
seven important types of wastes, their associated costs and the ways in which
these wastes can be eliminated are shown in Table 1:
Table 1: Types of Wastes, Costs and their Elimination
Types of Waste
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1. Transportation
Associated Costs
Damages, quality
deterioration, etc.
Ways of Elimination
Mapping product flows,
continuous flow of processes, etc.
2. Inventory Increased lead time, Improve workflow among work
occupies floor space, centres, use JIT, Kanban and
delay in identification SMED, etc.
of problems, inhibits
communication, etc.
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3. Motion Health hazards, safety Redesign plant layout for
hazards, etc. accessibility and according to
ergonomics, 5S, VSM, etc.
4. Waiting Poor material flow, Establish processes that are linked
increased lead time, long together and one process feeds
production run, more the next in the production system,
distance between work standardise work, etc.
centres, etc.
5. Overproduction Smooth flow of materials Use pull system and Kanban,
is hindered, quality is produce smaller batches
degraded, productivity economically using SMED, match
hampered, high storage production rate with the demand
costs, increased lead times, rate, etc.
etc.
6. Over-processing High cost of equipment Use low-cost automation or Kaizen
to simplify the manufacturing
specifications and processes.
7. Defects Rework, scrap, quarantine, Poka-Yoke, Jidoka, RCA,
inspection, rescheduling, Standardise work, etc.
capacity loss, etc.
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7. List two ways of eliminating inventory waste.

S elf 8. For eliminating waiting waste, an organisation can establish ______ that
A ssessment are linked together.
Q uestions
Assume that you are working in a lean construction environment. What kind of
wastes can you observe? Use a combination of the power of your imagination
A ctivit y 1
along with the Internet-based resources to discuss and describe two scenarios:
1. Where all the wastes are consciously eliminated; and
2. Where no waste is eliminated.
What kind of impact these two scenarios will have on the organisation
undertaking the construction project?
5.5 SUMMARY
IT
Nowadays, organisations are focussing on activities, like quality development,
process improvements, pull production, continuous improvement, value stream
management, etc. The principle concept of lean philosophy relates to identification
and reduction or elimination of waste. Waste needs to be eliminated from all parts
of an organisation, especially from the production processes. Waste is defined as
any work that does not add value for the customer. Muda is a Japanese word
and refers to waste. Taiichi Ohno categorised manufacturing wastes into seven
categories, i.e., Transportation (T), Inventory (I), Motion (M), Waiting (W),
Overproduction (O), Over-processing (O), and Defects (D).
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The steps of a process in which some value is added to a product or service and
for which the customers would be willing to pay are called as VA steps. ENVA
activities are those activities which do not add any value to the product or service
but are necessary in the presence of a given operating system or equipment.
NVA activities are those that do not add value to the product or service. There
are multiple sources of wastes in a process such as process delays, unnecessary
movement, rework, etc.
Nowadays, organisations and people are losing their power of observation.
Organisations are suffering from a condition termed as organisational cataract.
There are three enemies of lean. These are also referred to as the 3Ms. Muda refers
to wastes within a process or production activity. Mura refers to unevenness in the
workflow. Muri refers to the overburden of equipment or operators. Total cost,
total cycle time, etc., are metrics related to cost quality and schedule.
5.6 KEY WORDS

Muda: The Japanese term for waste.
Muri: The Japanese term for being overburdened.
Mura: The Japanese term for unevenness.
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Overall Equipment Effectiveness (OEE): A standard for measuring and

improving manufacturing productivity.
Total cycle time: The total time from the beginning till the end of a process.
Downtime: The time when a machine is not in use due to technical glitches.
Overproduction: Production of a product in excess quantity than required.
5.7 CASE STUDY: COMPANY X ELIMINATES WASTE

Organisation X is a manufacturing and service company. It is established in
Lower Silesia, Poland. During 2012-2013, the organisation has recorded a high
degree of dissatisfaction among customers. X has received multiple complaints
regarding the customers receiving damaged or spoiled products. After some
preliminary investigations, X found out that this problem was occurring due
to product packaging process. To find out the exact problem and eliminate it, a
task team was set-up. The team first found that X used three primary channels
for distribution, namely courier, own transport and personal collection by the
customers themselves. Out of these, courier was the most frequently used channel.
It was a preferred channel because of the short delivery time.
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For orders of standard products, X was able to assemble 70-80% of the orders by
10 a.m. These products were delivered the same day. X stopped its production
at 2 p.m. At 1 p.m., the products were dispatched to the sales department that
was located away from the production unit. The assembled goods were packed
using thin plastic bags and were tied by knots at ends. The team was of the
opinion that this level of packaging was quite sufficient when the delivery was
made by their own transport. However, if such packaging was used in case of
shipping by courier, then it was not sufficient and required some extra packaging
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for protection. To ensure that couriered goods were not damaged or soiled, they
were packed in stretch films and tapes. One of the production employees was
assigned the task of packing and shipping due to which he had to stay away from
his work area. According to the task team, this was a waste. The team suggested
that this issue can be solved very simply. The solution was to use stronger plastic
bags having the desired structure and appropriate gram weight. Using stronger
packaging materials, the products could be packed immediately after they were
assembled. This helped in protecting the quality of the product. This also ensured
that the production workers did not have to walk away from their work and do the
task of additional packaging for shipping products by courier.
The new solution decreased the incidences of damaged products but it increased
the costs because the thicker plastic films were expensive. The team decided that
the length of film used for packaging should be minimised.
Earlier, the product was packed in plastic films keeping a good amount of length
at both ends. The ends were tied into knots at both ends and the extra packaging
was cut from ends. This was a waste because the cut ends of plastic films were
useless and ultimately ended in scrap. At times, the employees used to cut the
packaging film of a very short length and were unable to tie knots at the ends
which again resulted in wastage of plastic film. This problem was solved by using
plastic cable ties.
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A sample image of a cable tie is shown in Figure A:
Figure A: A Sample Image of a Cable Tie

Source: https://polybagsdirect.com/cable-tie-wrap.html
The use of cable ties also helped in improving the overall packaging and
presentation of the product. Order shipment process became quick and simpler.
This also eliminated the non-value adding phase of extra packaging that was done
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by a worker. This step was critical because the task team understood that the
customers did not value the number of layers or tapes that went into the packaging.
It has already been stated that the new solution was effective but also increased the
costs due to purchase of stronger plastic packaging film and cable ties. However,
X was able to save a lot of money on stretch films and tapes. After a thorough
discussion with employees, customers and the film suppliers, an optimal gram
weight of the plastic film was decided. After this investigation was over, the above-
discussed packaging system has been standardised and adopted by X.
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Source: http://repozytorium.put.poznan.pl/Content/349799/Chomatowska_Barbara_Zarczynska-Dobiesz_
Agnieszka_Elemination_of_waste_in_production_enterprises%20%E2%80%93%20case_%20studies.pdf
QUESTIONS
1. Why were X’s customers becoming increasingly dissatisfied?
(Hint: X’s customers becoming increasingly dissatisfied because they were
receiving damaged and soiled products.)
2. Was the solution suggested by X’s task team optimum?
(Hint: Yes, the solution was optimum because it was able to resolve the
packaging problem. It did increase the cost but the resulting savings were
far greater.)

1. How many types of wastes are defined in Lean Philosophy?
Exam Check
a. 4 b. 6
c. 7 d. 8
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2. What is the main focus of continuous improvement in a lean system?

a. Errors
b. Waste
c. Mistake
d. Flexibility
3. According to Lean principles, which is the best description of waste?
a. Waste is a part of a process and always inevitable.
b. Waste is something you put in the rubbish bin.
c. Waste is overproduction.
d. Waste is the usage of the resource which is not recognised by the customers
as adding value.
4. Lean describes ‘value’ from the perspective of the ________.
a. Customer
b. Manager
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c. Stakeholder
d. Operator
5. Which of the following terms can be identified with the eight wastes in Lean?
a. Uptime
b. Downtime
c. Downtown
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d. Uptown
6. Which of the following is the part of the NVA processing waste?
a. Transport damage
b. Poor workflow
c. In-process protective packaging
d. Broken machinery
7. Which is the main approach used by the Toyota Production System?
a. Six Sigma
b. Lean manufacturing
c. TQM
d. Kaizen
8. Which of the following statements does effectively describe lean
manufacturing?
a. Method for reducing labour cost
b. Efficiency in managing the processes
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c. Set of techniques for improving the system

d. Means of improving the responsiveness of the customer
9. The Gemba walk helps improve the system by
a. Identifying the place of waste
b. Understanding the place well
c. Identifying the place of value addition
d. Talking to people
10. Which of the following is not the part of the eight wastes in lean?
a. Waiting b. Transportation
c. Overproduction d. Excess machine capacity
11. Which management tool helps in decreasing overproduction?
a. Kanban b. Color-coding
c. Visual display d. Kaizen
12. Which of the following options describes over-processing waste?
IT a. Unlimited inventory
c. Overproduction
b. Non-value-added processing
d. Transport and handling
13. Which of the following wastes is associated with shortage of material?
a. Non-value processing b. Overproduction
c. Waiting d. Excess motion
14. Which of the following wastes is associated with JIT?
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a. Large suppliers needed
b. Products to be pulled through production to meet the demands of the
customers
c. Large batches of similar products to be produced
d. Processes to be controlled using computer-based systems
15. Who among the following is the largest contributor to the TPS and lean
technology which has its roots at Toyota?
a. Genichi Taguchi b. Shigeo Shingo
c. Taiichi Ohno d. Kaoru Ishikawa
16. Mura is related to unevenness, whereas Muri is related to _________.
17. Wastes are a source of ___________ for an organisation, and value addition
for customers is a source of revenue for an organisation.
18. ______________ is merely working on activities which do not add value to
the customer.
19. ___________ are descriptions collected as a result of human senses and they
do not contain numbers.
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20. When there is excessive demand for goods and machines, and the operators
are totally occupied with the work and work, is being done using 100%
capacity, ___________ occurs.
21. Over-processing and ineffective system of monitoring causes ______ waste.
22. Waste results in reduction of profit margins, increase in consumer costs,
reduction in quality and decrease in staff and customers’ satisfaction. (True/
False)
23. To derive the maximum value at the least possible cost, it is necessary to
eliminate the wastes or ENVA activities. (True/False)
24. Ohno emphasised on observing the shop floor and determining ways for
continuous improvement. (True/False)
25. Muri occurs due to the absence of standardisation of the processes. (True/
False)

1. Which of the following is not an ENVA activity?
IT
a. Purchase
b. Rework
c. R&D
d. Quality inspection
2. An organisation has overproduced shampoo sachets by 1 lakh units of a
particular type. This product was manufactured for a hotel chain and has no
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buyers outside. Assume that you are a marketing consultant. Suggest how
the organisation can use or sell these extra products.
a. Wait for the next order from the hotel chain
b. Distribute as free samples
c. Donate for charitable purposes
d. Distribute in markets as a product launch and seek customer feedback
3. Consider the following two lists and mark the correct answer:
List 1 List 2
A. Waiting i. Wrong designation
B. Non-utilised talent ii. Searching parts
C. Motion iii. Information system hanged
a. A – ii; B – i; C – iii
b. A – i; B – ii; C – iii
c. A – iii; B – ii; C – i
d. A – iii; B – i; C – ii
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4. Consider the signs and symbols as shown in the image below:
Source: https://www.spotlightnepal.com/2018/06/28/business-case-health-safety-management-workplace/
These symbols are related to which lean concept?

a. Shine b. Safety
c. Sort d. Standardise
5.10 ANSWER KEY

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Topic Q. No Answer
Concept of Waste in Lean 1. raw materials
2. True
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Areas of Waste 3. Waiting
4. False
Waste Measurement Techniques 5. OEE
6. Value-added ratio
Elimination of Wastes 7. Kanban, SMED
8. processes
Q. No. Answer
1. c. 7
2. b. Waste
d. Waste is the usage of the resource, which is not recognised by the
3.
customers as adding value
4. a. Customer
5. b. Downtime
6. c. In-process protective packaging
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Q. No. Answer
7. b. Lean manufacturing
8. d. Means of improving the responsiveness of the customer
9. c. identifying the place of value addition
10. d. Excess machine capacity
11. a. Kanban
12. b. Non-value-added processing
13. c. Waiting
b. Products will be pulled through production to meet the demands of the
14.
customers
15. c. Taiichi Ohno
16. overburden
17. costs
18. Over-processing
19. Qualitative observations
20.
21.
IT
Muri
inventory
22. True
23. False
24. True
25. False
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Q. No. Answer
1. b. Rework
2. d. Distribute in markets as a product launch and seek customer feedback
3. d. A – iii; B – i; C – ii
4. b. Safety
@ SUGGESTED BOOKS
Floyd, R. C. (2010). Liquid Lean: Developing Lean Culture in the Process Industries.
New York: Productivity Press
Liker, J. (2004). The Toyota Way, 14 Management Principles from the World’s
Greatest Manufacturer. New York: McGraw Hill.
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E-REFERENCE
The Essence of Lean is to Eliminate Waste | Lean Production. (2019).
Retrieved 30 July 2019, from https://www.leanproduction.com/intro-to-lean.
html What is Muda, Mura, and Muri?. (2019). Retrieved 30 July 2019, from
https://theleanway.net/muda-mura-muri
IT
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CHAPTER
6
FACILITATING CHANGE THROUGH
KAIZEN
Table of Contents
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Chapter Objectives
Introduction
Learning Outcomes
6.1 Change
6.1.1 Characteristics of Change
6.1.2 Importance of Change
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6.1.3 Types of Change
6.2 Resistance to Change
6.2.1 Causes of Resistance
6.2.2 Management of Resistance to Change
6.2.3 Development of Lean Six Sigma
6.3 Organisational Change
6.4 Kaizen
6.4.1 Five Elements of Kaizen
6.4.2 Tools of Kaizen
6.4.3 Kaizen Principles
6.4.4 Benefits of Kaizen
6.4.5 Kaizen and TQM
6.5 Kaizen Process for Problem Solving
6.5.1 Start Gemba
6.5.2 Conduct Gembutsu
Table of Contents
6.5.3 Take Temporary Measures
6.5.4 Root Cause Analysis (RCA)
6.5.5 Standardise
6.6 Kaizen Teams
6.6.1 Roles of Kaizen Teams
6.6.2 Target Areas of Kaizen Teams
6.7 Summary
6.8 Key Words
6.9 Case Study
IT6.12 Answer Key
A.
B.
Short Answer Questions
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Facilitating Change Through Kaizen
 Describe the concept, importance, characteristics and types of change

 Explain the causes of resistance to change and its management
 Discuss the concept of organisational change
 Explain the five elements of Kaizen
 Describe the tools, principles and benefits of Kaizen
 Explain the Kaizen process for problem solving
 Describe the concept, roles and targets of Kaizen teams
INTRODUCTION
In the previous chapter, you studied the a importance of identifying, measuring and
Read
Pre-read Connect
IT
eliminating wastes in order to implement lean philosophy. You also studied about
the three enemies of lean, viz. Muda, Mura and Muri. The chapter described the
eighth specific types of waste, their identification and causes. Waste measurement
techniques and the elimination of wastes had been discussed at the end of the
chapter.
When an organisation brings changes, they aim at continuous improvement.

A change brought by the lean culture is a strategic and operational in nature.
Some of the most accomplished business enterprises across the globe have
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been implementing lean techniques for improving their processes and reducing
waste. The changing demands of the industry and customers have compelled
the organisations to modify their processes to withstand in the dynamic and
changing marketplace. The demands of the customers are never constant and the
customers are the most important for the growth and survival of the businesses.
Organisations, today, cannot afford wastage and bad quality products.
There is an increasing need for changing the systems and procedures. Changes,
here, refer to the improving and updating the processes. Changes are being made
to industries across the globe and it is necessary for organisations to follow the
flow, adhere and adapt to the requirements of the customers in order to survive in
the industry. The demand of the industry can be incorporated when organisations
practice Kaizen or continuous improvements. Kaizen aims at continuous
improvement of the processes, products and services. Continuous improvements
generate error- and waste-free processes that support delivery to the customers
and improve business processes to increase efficiency and reduce costs.
In this chapter, you will study about the concept of change, its importance and
types. You will also study about the resistance to change and the development of
Six Sigma. In addition, the chapter will also explain the organisational change and
how changes can be implemented using Kaizen philosophy, Kaizen teams and
Kaizen events.
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LEARNING OUTCOMES
Speculate about the kinds of changes that might occur in different business
environments
Develop certain methods or processes to manage resistance to change
Propose how a particular organisational problem can be solved using
Kaizen
6.1 CHANGE
In lean management studies, you must have come across terms, such as waste,
process improvement and continuous improvement quite frequently. Any
N ote organisation, system, process or function can be improved by introducing
There are three appropriate changes.
tools to introduce
changes in an
organisation.
These are Kaizen
(continuous
IT
Change refers to any process or activity or an act which enables the transition from
one situation or state to another. Randomly, introducing changes to a system or
process can prove to be quite disruptive. Changes must be brought in a systematic
improvement), manner. This is accomplished by using change management. Change management
Kaikaku is a managerial function and a systematic approach for dealing with transition
(transformation of or transformation of an organisation’s systems, functions or processes. Change
mind) and Kakushin management ensures that changes are implemented in an exhaustive and smooth
(innovation).
manner without having any disruptive effect.
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Most of the organisations and managers want to pursue improvement, but they
are not very receptive to the idea of changes. Sometimes, they wish to introduce
the changes that can be controlled completely. Organisations’ management wants
to know the quantum and type of effect a change will have on the organisation.
Such systems of working often prevent an organisation from undertaking the
change activities. Resistance and fear associated with change are usually, and the
result of individual and organisational beliefs can be considered as the hindrance
to the change implementation.
There are various ways to introduce changes in an organisation. Randomly

introducing changes are disruptive in nature and are usually forced upon
employees of the organisation. Another way is to gain the confidence of employees
and bringing changes incrementally. An organisation must also develop a lean
mindset in its employees and its members. Lastly, changes are most effective
when some innovation takes place. In order to take the full advantage of lean,
organisations and individuals need to embrace the change.
6.1.1 CHARACTERISTICS OF CHANGE

Various types of changes keep happening in the world at every moment. Changes
occur in the population, customer trends and demands, technology, organisations,
people and economies, etc. In today’s highly competitive world, the businesses
152
which fail to embrace the change can soon lose out on their market share to the
competitors in the industry.
Successful organisations look for changes in their systems to keep ahead of the
competition in the industry. Changes may range from improved technologies
to the development of a new product. For incorporating changes successfully,
organisations must use a systematic approach to move the organisation from its
present state to the intended future state. Also, an organisation must understand
the characteristics of changes. Some of the important characteristics of changes are
as follows:
Change is a continuous process: Change is a continuous process because
changes have taken place or are taking place in situations, organisations,
industries, societies, technologies, people, perspectives and environment
across the world. Therefore, it can be said that change is a continuous process.
Change is for betterment: Change is always done with an intent for the
betterment of the processes or systems.
Change is accompanied by resistance: At most times, organisations face
resistance to change from employees or even from the upper management
who might be apprehended about the impact. Also, the prospective changes
IT
might have on organisation’s process or systems or organisation as a
whole. Therefore, sometimes the implementing of changes becomes quite
challenging for organisations.
Change requires consistent communication: An important factor of change
is effective communincation system to address the people for the required
transition or changes. It is necessary to communicate with employees on a
regular basis and help with responding to the queries of the employees.
Change implementation requires training and goal-setting: Once the
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change initiatives are announced, it requires that the employees are given
proper training for effective implementation of the new initiative. In
addition, the required changes and how they affect the work of employees
must be communicated to them. For adapting to changes, employees should
be aware of their roles and responsibilities.
STUDY HINT
Any act that alters Recognition of change: It is important to encourage change and accelerate
the status quo is its speed by recognising the employees and their achievements.
called a change.
Change is not new: Changes are the part of life, evolution and organisations.
They have been taking place for centuries and are not a new concept. Changes
may be associated with a situation, thing, system, process, society or more.
6.1.2 IMPORTANCE OF CHANGE

Changes are the important part of human life as well as organisations. Change
is important for organisations to survive in a dynamic and global economy. The
requirement for change is realised from within an individual or from within an
organisation. Organisations’ needs for change may be driven by internal or external
pressures. Organisations may want to change in order to take advantage of new
153
opportunities or new technologies that may help in the growth of the organisation.
Changes are important because of the following reasons:
N ote
William Pollard Changes lead to growth: Changes are often accompanied with opportunities
stated that without for growth and learning. When a change is introduced in an organisation, it
change, there is gains experience. If the change is successfully implemented, then it usually
no innovation, leads to better productivity and increased profits.
creativity or
incentive for Changes help with flexibility: When the introduction of changes becomes a
improvement. regular affair, employees become accustomed to adapt to new things, skills,
Those who
initiate change will
situations and environments. Employees become much more flexible in
have a better working in various types of environment.
opportunity
to manage
Changes bring improvements: The actual purpose of introducing changes is
the change that is to improve certain situations, processes or systems.
inevitable.
Changes reinforce life values: Changes help organisations and individuals
look at things from different perspectives. While implementing changes,
organisations and individuals re-evaluate the different situations, systems
and processes.
Changes trigger progress: Changes that are brought by new technologies,
IT

new situations and systems help the organisations and individuals in making
progress and gaining profit from the same.
Change helps with new beginnings: Changes are often made to start new
beginnings. Introducing some new technologies that have not been used
anytime earlier or introducing some breakthrough.
6.1.3 TYPES OF CHANGE

The everchanging and dynamic business environment has prompted the
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business organisations and the individuals to look at changes that might affect
teh competitiveness in the given current situations. Changes are taking place in
technologies and economies. It is important that these changes are implemented
to improve the systems and processes and to avoid any unforeseen failures. There
are various types of changes as shown in Figure 1:
Unpredictable Anticipatory
Reactive Change
Change Change
Incremental Operational
Planned Change
Change Change
Directional
Strategic Change
Change
Figure 1: Types of Changes
Unpredictable change: Unpredictable changes are those changes that take

place all of a sudden. The results of these changes do not become known until
late and they may not be under the direct control of a system or organisation.
154
Reactive change: Reactive changes are those changes which take place as
a reaction or response to certain situations or a chain of events. Reactive
changes occur in organisations when there is an increase or decrease in
demand and supply of goods. Reactive changes may also be made as a
response to a problematic situation.
Anticipatory change: Anticipatory changes are those changes that are made
when an individual or organisation anticipates that one or more events may
take place. The enterprises reorient themselves or modify certain situations
to face anticipatory situations. Bringing these changes will require dealing
with them individually or as the part of a system. Anticipatory change is also
known as proactive change.
Planned change: There are certain changes that are planned well in advance
and they are for the development of a system or structure. Such changes
are executed for improving the systems or processes and for achieving the
certain goals or objectives. Planned changes are conscious changes.
Incremental change: Certain changes must be introduced in an incremental
manner in certain parts of an organisation or system. Small changes result
in creating a better and robust system. These incremental changes help in

IT
creating an adaptive method for realising the vision of the organisation.
Operational change: At times, organisations may be required to bring
changes in their operations due to certain internal or external pressures.
Organisations are always on the lookout to improve the quality of their
products and services in line with the changing demands of the customers or
due to changes are being made by the competition. Such changes prompt an
organisation to bring changes within their systems.
Strategic change: Organisation implements strategic changes by changing
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their management style, procedures or internal processes. The strategic
changes are executed with an aim to create better organisational structures.
Directional change: At times, major failures within or outside an organisation
create some internal and/or external pressures which necessitate an
organisation to make some directional changes. Most common types of
pressures are the pressure of competition, changes in the government
policies, taxation policies, pricing structures, import and export policies, etc.
1. ___________ is a managerial function and a systematic approach for

dealing with transition or transformation of an organisation’s systems,
S elf functions or processes.
A ssessment
Q uestions 2. Change implementation requires training and goal-setting. (True/False)
Select any organisation that you appreciate. Now, make a list of historic
A ctivit y 1 changes that it adopted in a chronological order. Also, against each change,
describe the benefits or losses experienced by the organisation.
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6.2 RESISTANCE TO CHANGE

Resistance to change refers to the act of opposing the changes because of the fear
of unknown impact. Employees and organisations fear of being dragged into
an unknown future state. Change is for the betterment of the systems and for
increasing the productivity of an organisation. however, change can also create
a situation wherein the employees experience loss of confidence, insecurity and
uncertainty. In organisations, when the employees are not properly introduced to
changes, they may put-up objections and may build invisible walls that prevent
them from accepting changes. While a change may be necessary but there are
some people who are hesitant to take on some new responsibilities or positions
and leave behind their comfortable positions within the organisation. Changes
may make them feel threatened and insecure and also affects their work. Changes
are also assumed to be unwarranted when employees do not feel the need for
changes. Abrupt changes that are introduced without communicating the same
to the employees. Such changes make the employees feel that they have not been
involved in the decision-making process.
6.2.1 CAUSES OF RESISTANCE

IT
Resistance to change can happen due to a number of causes. Employees of an
organisation oppose change from the very start might face a major setback.
Therefore, it is in the best interest of the organisation to deal carefully in matters
involving the human resource department. Organisations must understand that
resistance to change that comes from their employees is not irrational. Employees
resist those changes which they believe are not in their interests. To deal with
such situations, an organisation needs to find out the causes of resistance from
the employees. Some of the common causes of resistance to change are shown in
Figure 2:
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Job Loss
Ineffective Communication and Engagement
Lack of Trust
Unknown Future
Poor Timing
Figure 2: Common Causes of Resistance to Change
Let us now discuss these causes.

Job loss: It is most common for employees to resist the change due to
insecurities related to their jobs. In every organisation, people will definitely
oppose any technological or administrative changes which may cause
elimination or reduction of their roles.
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Ineffective communication and engagement: Lack of communication

creates a lot of problems. This is an important reason why employees oppose
change. It is important to communicate change to employees well before a
change actually takes place.
Lack of trust: Trust is a vital component of a healthy organisation.
Organisations where the employees do not trust each other or the
management, are more prone to resistance to change from employees,
whereas an environment in which employees trust and respect each other
and their management are usually less resistant to change.
Unknown future: When changes are introduced, they must be accompanied
with a description of the current state of affairs and how the prospective
‘change’ is expected to change the situation. In the absence of this, the
employees become apprehensive about the future state of affairs and how it
would impact them. This fear of the unknown sometimes leads the employees
to show their resistance to change.
Poor timing: Change must be introduced at suitable timing. At many
instances, it is not the change, but how and when the change will be brought
is the cause of resistance.
6.2.2
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MANAGEMENT OF RESISTANCE TO CHANGE
When an organisation faces resistance to change, it is in the best interest of
organisation and employees to try and overcome it amicably. The management of
the organisation should help its employees in adjusting to changes. Management
personnel who are engaged to implement the change must also become the
facilitators of change so that all the changes are made in a harmonious manner.
These personnel must convince employees that the proposed changes are being
implemented for gaining certain benefits, and changes would benefit them.
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The management of an organisation should ideally involve employees in the
planning process of the implementation of change. This practice ensures that the
employees feel like the part of the system. Employees participation in planning and
decision-making processes reduces the instances of resistance while implementing
the changes. To manage resistance to change, employees should take care of the
following aspects:
Changes should ideally be incremental or staged
Changes do not create insecurity for employees
Management should obtain the opinions of the employees before a change
is implemented
Managers should demonstrate effective leadership by adapting to the
changes themselves. They must remember that employees do not do the
things they are told to rather the things they observe their managers doing.
Employees should be given proper training so that they themselves may
accept the changes with confidence.
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6.2.3 DEVELOPMENT OF LEAN SIX SIGMA

Bill Smith and Bob Galvin of Motorola along with their engineering team
developed the Six Sigma measurement system in 1980s. Six Sigma is an approach
and continuous improvement methodology used for eliminating defects in the
products, processes or services. Six Sigma is based on statistical data. In the 1990s,
it was adopted by Jack Welch and the General Electric. At Motorola, Six Sigma
brought a cultural change.
Six Sigma approach developed by Smith and Galvin was based on the methods
of Dr. Edwards Deming, Walter Shewhart and Ronald Fisher. In statistical
studies, sigma (σ) is used to represent the standard deviation for a population.
The standard deviation is a measure of variation in any data set. In organisations,
data sets may represent data related to various processes. A process’s goodness or
appropriateness may be judged on the basis of certain process variables. A defect
in a process is detected when limits are defined for good and bad outcomes of a
process. In a six-sigma process, the process mean is six standard deviations from
the nearest specification limit. The difference of six sigma is sufficient to provide
a buffer for the natural variations occurring in a process which helps the variation
remain within the defined specification limits. For example, a product’s weight can
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vary between 65 milligrams and 69 milligrams to meet customers’ expectations.
Here, the process mean will be 67 milligrams with a standard deviation less
than 0.005 when the distribution is normal. It means that 69 will be six standard
deviations away from 67.
In the initial chapters of this book, you have already studied about the development
of lean management systems. You also studied how practices developed under the
TPS came to be formally known as lean practices. It has made progress in service
and manufacturing industries. Lean practices are used to reduce/eliminate waste,
improve business processes and generate greater profits.
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Similarities between Lean and Six Sigma are as follows:
Both Lean and Six Sigma practices have their origin in complex manufacturing
environments of Japan and the USA.
The ultimate aim of both Lean and Six Sigma are same. These methodologies
are used to eliminate waste and improve process efficiencies.
Both Lean and Six Sigma can be implemented by experts in the concerned
fields and they are successful only if discipline and time management is
present.
Major differences between Lean and Six Sigma are shown in Table 1 as follows:
Table 1: Difference between Lean and Six Sigma
Basis of Lean Six Sigma

Distinction
1. Meaning and A methodological way A systematic way to ensure and
Origin of eliminating waste and control the quality of products
improving production. It and processes. It originated in the
originated in the 1990s. 1980s.
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Basis of Lean Six Sigma

Distinction
2. Main Focus/Aim Removal of waste, process Removal of variability from
flow correction, improve processes, assuring quality,
process efficiency, customer satisfaction, eliminate
optimise processes, etc. defects and waste by reducing
variability.
3. Tools Visual Mathematical and statistical tools.
4. Consequences Process flow correction Reduction in flow time.
and uniformity.
5. Waste Non-added value. Variation in process or product
Classification characteristics.
6. Basic Nature It is a mind set and a set It is a program aimed at
of principles that can be eliminating variability and
adopted by any individual reducing risk. Six Sigma cannot
or organisation. It is be practised by anyone. It can be
most effective when it is practiced by certified professionals
embedded into the culture only. Six Sigma certifications are
of the organisation. divided into five belts such as
white belt, yellow belt, green belt,
IT black belt and master black belt.
A pictorial representation of Lean Six Sigma is shown in Figure 3:
N ote Lean Focus on Waste Elimination supports Six Sigma Quality

Six Sigma aims (waste elimination eliminates an opportunity to make a defect)
at achieving a Lean
production level Goal: Improve process Six Sigma
that is 99.99996% performance through waste Goal: Improve process
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free from error. elimination & cycle time performance in relation to what
reduction is critical to the customer
Focus: Bias for action Focus: Bias for analysis
Method: Implement Lean tools Method: Uses the DMAIC
such as Kaizen events. Value method and quality tools
Stream Mapping, 5S, TPM etc. Deployment: Explicit
Deployment: Implicit Infrastructure
infrastructure Customer Satisfaction
Speed, Flow, Cost
Six Sigma Quality supports Lean Speed

(less rework means faster cycle times)
Figure 3: A Pictorial Representation of Lean Six Sigma

Source: https://www.greycampus.com/blog/quality-management/a-brief-introduction-to-lean-and-six-
sigma-and-lean-six-sigma
The fusion of Lean Management and Six Sigma results in Lean Six Sigma.
This management practice combines the synergies of Lean and Six Sigma. To
understand the importance of Lean Six Sigma, it is important to first understand
their similarities and differences.
According to the American Society for Quality (ASQ), Lean Six Sigma is a fact-based,
data-driven philosophy of improvement that values defect prevention over defect detection.
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It drives customer satisfaction and bottom-line results by reducing variation, waste and
cycle time, while promoting the use of work standardisation and flow, thereby creating a
competitive advantage. It applies anywhere variation and waste exist, and every employee
should be involved.
A combination of lean and Six Sigma helps in eliminating wastes, detecting and
removing defects beforehand and improving the efficiency and quality of the
processes.
3. Involving employees in the ________ process ensures that employees

feel like the part of the system.
S elf
A ssessment 4. Employees resist to those changes which they believe are not genuine.
Q uestions (True/False)
6.3 ORGANISATIONAL CHANGE

Nowadays, organisations realise the importance of change. Considering a host
of drivers of change, like increasing levels of globalisation, economic instability,
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aggressive and intense competition, brisk changes in technology, etc., it has now
become inevitable for organisations to incorporate changes. In an organisation,
changes may be made to strategies, processes, procedures, technologies, culture,
norms, values, etc.
It is necessary for organisations to change because the businesses would fail to

meet the changing needs of their customers. Today, there is no organisation or
industry which is not subject to constant change. Organisations need to change
the policies, strategies and procedures which are no longer effective. In addition,
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organisations must make changes which are essential for moving the organisation
in the right direction.
5. Organisations need to change the policies, strategies and procedures

S elf which are no longer effective. (True/False)
A ssessment
Q uestions
6.4 KAIZEN
The Japanese term Kaizen means change for good. The literal meaning of this term
is continuous improvement. It can be considered as a form of control.
An important objective of Kaizen is the elimination of waste, standardisation of

work, just-in-time delivery, use of efficient equipment and quality control. The
changes are made incrementally over a period of time and can be small or big.
In a lean and Kaizen environment, employees work towards achieving efficiency
in the manufacturing processes, which is at the heart of operations. To achieve
this, organisations make use of metrics for equipment utilisation, increasing
productivity, and cost reduction.
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Kaizen philosophy suggests continuous improvement of processes and operations

in such manner that it involves all the employees of the company.
Practising Kaizen makes people work together and create an atmosphere

favourable for teamwork. Regular team meetings which involve discussions
related to changes, projects and methods of improvements are held. All employees
work together for the profitability and the success of the organisation.
6.4.1 FIVE ELEMENTS OF KAIZEN

The success of an organisation depends on the continuous small improvements or
changes in the systems or processes. It has been observed that small incremental
changes within the systems and processes are able to create much more impact
than any major changes that are introduced randomly.
Kaizen method is established on the basis of five key elements as shown in

Figure 4:
Teamwork
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Personal Discipline
Improved Morale
Quality Circles
Suggestions for Improvement

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Figure 4: Elements of Kaizen
Let us now discuss the relevance of these five elements:

Teamwork: All the work is done by teams and by the division of duties and
responsibilities.
Personal discipline: There is presence of strong personal discipline in the
employees which makes them self-directed and self-motivated.
Improved morale: All the employees become confident and motivated. They
can freely give suggestions.
Quality circles: Organisation forms quality circles of employees.
Suggestions for improvement: Organisation believes that there is always a
room for improvement.
6.4.2 TOOLS OF KAIZEN

Kaizen philosophy originated in Japan and it can be applied to many aspects of life
as well as organisations. Kaizen is practiced in organisations by making the use of
certain lean tools. Once these lean kaizen tools are implemented, the improvement
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in the organisation’s productivity and efficiency can be experienced. Some of the

important Kaizen tools are as follows:
Value Stream Mapping (VSM): VSM is a tool which results in the creation of
a flowchart. This flowchart helps to display, analyse and improve the steps
required for delivery of a product. It helps in reviewing the flow of processes
and information from the start to the end when a product is delivered to the
customer. Just like the other flowcharts, it uses symbols to represent different
tasks, and the flow of information. It helps to look at the flow of processes
for identifying wastes, mapping of value-adding and non-value-adding
activities. This helps in identifying the problems and areas of improvement.
Fishbone diagram: The fishbone diagram helps to identify the reasons that
lead to the problems. Employees can find ways of resolving them accordingly.
A problem may be caused by a number of reasons, and the fishbone diagram
helps to identify all the causes and sub-causes. It presents a comprehensive
picture which makes it easier to solve the problem.
Pareto analysis: The Pareto analysis helps in identifying the problems
according to their priorities. High priority problems should be addressed
first. Using this tool, a Pareto chart or analysis is created which gives
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6.4.3
represents a problem pictorially. Looking at the chart, one can decide which
problems need to be addressed on priority.
KAIZEN PRINCIPLES
Kaizen philosophy aims to improve systems and processes and eliminate the
wastes. Kaizen is a philosophy that is adaptable and flexible. It can be applied
to any form of work, personality and preference. Some of the most important
principles of Kaizen are as follows:
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Processes should be standardised so that they can be organised and repeated
Track and compare the results of Kaizen with the requirements
Determine better and innovative ways to achieve the same results
Discover methods for responding in changing circumstance over time
Create an environment in which everyone feels empowered to contribute
Involve multiple people in the process and ask for their opinions
Use creativity to find low-cost, small improvements, etc.
Never stop improving
Be proactive
Part with old practices
Practise five-whys method
Get to the root cause of the problem
6.4.4 BENEFITS OF KAIZEN

The benefits of using Kaizen are as follows:
Reduces waste: The advantage of implementing the Kaizen methodology in
the workplace is that it helps reduce wastage in the processes and systems.
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Helps in troubleshooting: Kaizen helps to solve the problems by

troubleshooting with a faster rate. With immediate troubleshooting, one can
bring down the lead time and start the process of production.
Optimum utilisation of resources: Kaizen helps in judicious use of resources.
It helps to prioritise the needs and takes care of the demands of production
with limited resources.
Improved teamwork: Kaizen principle suggests that everyone from the
organisation should be working together and solving problems. People
work together in teams which helps them to complete their work with a
fresh perspective.
Better quality: Kaizen solves problems using effective teamwork which
improves the quality of production. The work becomes streamlined and
new and better processes improve the working conditions as well as the
productivity.
6.4.5 KAIZEN AND TQM

For the continually improving product and process quality, Total Quality
Management (TQM) and Kaizen are the most important tools. According to the
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ASQ, TQM can be summarised as a management system for a customer-focused organisation
that involves all employees in continual improvement. The TQM system works along
with the principles of Kaizen. The focus of TQM and Kaizen is on continuous
improvement of various quality processes of an organisation. TQM and Kaizen
both aim at achieving a positive transition with employees and the management
of the organisation for the betterment of the business. TQM along with Kaizen
involves everyone in the workplace for ensuring collective teamwork. When TQM
is used along with kaizen, the objective of customers’ satisfaction is fulfilled. Since
the system ensures that there are enough productivity and development to meet
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the demands of the customer. The process of TQM is not limited only to quality
control but brings continuous improvement to the organisation as a whole. TQM
and Kaizen implementation require total commitment from the management
and the employees for its sustainability and success. This also helps to have an
amicable atmosphere for the employees to connect with the management and
share their opinions and ideas for bringing a collective improvement into the
system. Though TQM and Kaizen both have a goal of continuous improvement,
they are not the same. TQM emphasises on the use of various tools and techniques,
whereas Kaizenis more philosophical in its approach.
6. In a Lean and Kaizen environment, employees work towards achieving

S elf efficiency in the ____________.
A ssessment
Q uestions 7. Name any two elements of Kaizen.
6.5 KAIZEN PROCESS FOR PROBLEM SOLVING

The Kaizen way of problem solving was developed by Toyota. It is a structured
and simple system for identifying and solving problems. The process of problem
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solving is practical and simple wich can be used for handling even the most complex
issues. This strategic method to solve problems helps in creating consistency within
an organisation. A key step in the problem solving process is getting to the root
cause of the problems so that it does not occur again. Kaizen process for problem
solving comprises eight steps which are as follows:
1. Clarify the problem
2. Break down the problem
3. Set the target
4. Analyse the root cause
5. Develop counter-measures
6. Implement counter-measures
7. Monitor results and process
8. Standardise and share success
These 8 steps can be mapped to the 4 steps of the Deming cycle or PDCA cycle as
shown in Figure 5:
IT 1. Clarify the problem
2. Break down the problem
3. Set the target
6. Implement
counter-measures
4. Analyse the root cause

5. Develop counter-measures 1. Plan 2. Do
4. Act 3. Check
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8. Standardise 7. Monitor
and share the the results
success and process
Figure 5: Steps in Kaizen Process for Problem Solving
The root cause of the problems can be identified using the following:
Flow chart: It is mapping the sequence of activities and decisions showing
the flow of the activities.
Check sheet: It is used for collecting data.
Histogram: It Summarises the output frequency distribution in the form of
a bell curve.
Fishbone diagram: It shows the problems arising from broad categories to
finer details.
Scatter diagram: It shows the relationships between two different types of
output measure.
6.5.1 START GEMBA

Gemba refers to the actual place or the place where value is created in the business.
Gemba walk is fast becoming a popular management technique. In Gemba walk,
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the managers visit the place of work and gain a valuable insight into the flow of
value through uncover opportunities. Gemba can be used in various industries
but the most common use of this process is in manufacturing, construction sites,
retail and sales. Gemba walk is accompanied by asking questions and learning to
respect people.
Gemba walk involves three key activities:

Take the Gemba walk: Take a Gemba walk around the shop floor and
monitor the work to find wastes.
Ask questions: Looking at the value stream at the workflow and try to find
the problem areas by using effective communication.
Show respect to people: It is necessary to collaborate with the people and
respect them. The Gemba walk is not to show the authority, but to work
together and find the problems as well as the solutions.
A Gemba walk can be made successful by following some important steps as given
below:
Have a plan and a mission

IT
Prepare a team
Focus on the process, not on people
Follow the value stream
Record observations
Ask questions
Do not make suggestions during the walk
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Walk-in teams
N ote Follow-up
The 3 Gs of lean
includes Gemba Return to the Gemba
(the actual place),
Gembutsu (the The main intention of the Gemba walk is to track the deviations from the standard
thing) and Genjitsu practices and look for a chance to change and improve the standards for the
(the facts). betterment of the organisation.
6.5.2 CONDUCT GEMBUTSU

Gembutsu is a Japanese word which means ‘the thing’ or ‘the real thing’. Three
concepts, namely gemba, gembutsu and genjitsu are interrelated. One must visit
Gemba, the real place of action to see the real action taking place (Gembutsu) for
collecting the facts (Genjitsu). It is necessary to take a walk and see the action
happening with own eyes. Generally, managers are informed about a problem
from somebody and take action on that. But to see the product being produced
and understanding the methods giving insight and knowledge can help in solving
the problem and making further improvements to the system.
It is important for the managers to review the quality of the products they market.
They need to be very clear that the finished products possess the quality demand
by customers. In Gembutsu, the managers need to check the product at different
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stages which will give them insight with respect to the quality of a product. This
will also help them to find out if there is any issue within the process or the system.
The advantage of conducting the Gembutsu is it allows managers to determine the
methods for improving the processes which will save money and time.
6.5.3 TAKE TEMPORARY MEASURES

Temporary measures are also referred to as countermeasures or band-aid
measures. The temporary measures are taken when the problem cannot be resolved
immediately, and a temporary action must be taken to reduce or eliminate the
problem from the process. Countermeasures are the part of a lean philosophy that
aims at eliminating or reducing the problems instantly but there may be some
improvements. In a countermeasure, the action that is taken may not be the last
one, but it is the best one at the time.
The temporary measures should be performed formally using a standard template

for the organisation which also acts as an effective way of communication. The
temporary measure should consist of the following:
Summarise the organisation’s vision and mission towards its and goal
IT

Defining the goals using standard metrics
Identifying the problem statement
Analysing the Root cause of each problem
Creating an action plan to resolve the problem
6.5.4 ROOT CAUSE ANALYSIS (RCA)

RCA is used for identifying the main causes of problems or events. Once the root
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causes are identified, solutions for resolving them can be found. RCA is based on
the concept that effective management needs to find methods of preventing the
problems and not wait for them to develop. RCA uses different problem-solving
techniques for identifying the problems and evaluating the reasons for their non-
conformity with the system or the quality of the product or process.
At times, the root cause of a problem is ignored, and it is falsely believed that
the problem has been resolved. RCA, when performed correctly can identify the
causes of breakdowns or systems that are the reason for the non-conformance.
Thereafter, the problem may be eliminated and stopped from recurring. RCA can
be used in the following situations:
Office processes and procedures
Quality control problems
Healthcare incident analysis
Safety-based situations or accident analysis
Failure analysis in engineering and maintenance
Change management or continuous improvement activities
Computer systems or software analysis
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RCA can also be used for analysing the problems and understanding the situation
by asking the following questions:
What was the problem?
How did the problem arise?
Why did the problem happen?
What types of actions are required for preventing the problem from recurring?
The benefit of using RCA are:
Identifying the causes of problems so that solutions can be found
Finding a logical method for problem solving with the data that exists
Identifying the present and future requirements for improving the
organisation
Applying a step-by-step process which can be repeated where one process
can confirm the results of another.
RCA process is shown in Figure 6:
IT Root Cause Analysis
Identify the
Problem
Monitor the Define the

System Problem
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Corrective Understand
Action the Problem
Identify the
Root Cause
Figure 6: Root Cause Analysis Process

Source: https://www.gadoe.org/School-Improvement/Federal-Programs/title-i/Documents/Title%20I,%20
Part%20A/FY17%20Documents/Identifying%20needs.pdf
6.5.5 STANDARDISE
Reducing waste and continuous improvement are central principles of
lean manufacturing. The main cause of waste (Muda) is the unevenness or
inconsistency (Mura). Waste occurs due to inconsistent demand and production
levels. Organisations concentrate on producing more and more goods and do not
pay attention to smoothening-out the processes and systems. This can be done
by improving the processes by reducing waste, removing all the obstacles or
bottlenecks and eliminating the needless processes.
When processes go through the lean cycle a number of times, it leads to

improvements in the system by making it more efficient, improving productivity,
reducing cycle times, reducing material cost, reducing scrap and lowers the costs
167
and improves the competitiveness. A lean environment continuously strives to

improve and standardise all processes.
In order to standardise a process, the following points must be kept in mind:

Employees should not be overburdened
Employees should be aware of the purpose of their work
Employee should be alinged with goals with the business
Accountability of success and failures should be fixed
Problems are finding by talking with the employees and understand the
situation from their perspective
8. In a Kaizen environment, the root cause of the problems can be identified

by using a histogram. (True/False)
S elf
A ssessment 9. Which of the following is not a key activity in Gemba walk?
Q uestions
a. Take the Gemba walk
b. Ask questions
IT c. Prepare a team
d. Show respect to people
10. One must visit _____ to see _____ for collecting ______.
6.6 KAIZEN TEAMS

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Kaizen teams are important for business organisations since they work and helps
the organisation in improving the systems and maintaining progress in between
N ote activities. Kaizen means ‘incremental improvement’ is combined with another
A Kaizen event is word to create the phrase ‘Kaizen events’. Kaizen event refers to certain events
also called Blitz (usually week-long) that are conducted for short duration. Kaizen events make
event.
improvement in the projects wherein a team works together with an aim to
improve the business processes or to solve the related business problems.
Kaizen teams take part in Kaizen events and the event is led by the Kaizen team
leader. The members of the Kaizen team help the business organisations in
understanding the Kaizen strategies and developing processes for achieving their
objectives. At times, such events may frustrate the management of the organisation
because the employees are away from the work which hampers the productivity of
the organisations. Kaizen events require effective planning. Therefore, training is
provided to all employees involved in a project. These activities make the Kaizen
teams efficient in their roles.
Generally, the Kaizen teams are selected on the basis of the size of an organisation
along with the kind of initiatives of the organisation is involved in. Larger
organisations with huge budgets usually rope in full-time Kaizen experts. Kaizen
experts help them with the proper execution of the Kaizen events along with
provide the training the employees. The Kaizen team consists of four to ten people
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who are from different specialisations or are working in a department which is

affected by some problem. Kaizen team members should be chosen from all the
departments of an organisation.
6.6.1 ROLES OF KAIZEN TEAMS

Kaizen teams are used for significantly improving the systems and processes and
for resolving the problems of a business organisation. The mission statement of
Kaizen events, the role of the Kaizen teams and the expected results should be
clearly described. Mission statement is written on a single piece of paper containing
all the important information related to the Kaizen event as follows:
Mission statement, including the objective
Team leader, team members and management sponsor
Statement of the current problem
Resources required
Expected date of completion
Results
Sign-offs
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Initially, the Kaizen team meets for developing an action plan, to take the
information and instructions along with brainstorming and idea generation. The
Kaizen team normally follows the methodology of Plan-Do-Check-Act (PDCA).
According to the PDCA methodology, the actions are planned, after which they
are implemented and carried out. Thereafter, the events are checked and based on
the results, the actions are taken. The cycle of PDCA continues until the problems
are resolved. Kaizen teams work on the problems and they gather their own
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information and facts after monitoring the situation and observing the problems.
Observations help in revealing information that would have not detected by using
data and reports. The Kaizen team works on the problem and when the team finds
an improvement, the team gives a presentation to the senior management. Kaizen
team uses a number of methods for working on the tasks and collecting information.
The duties, processes, activities, procedures and sequence of completing a work
can be altered according to the situation. Kaizen teams keeps on working until
the problem areas are standardised. The Kaizen team work on implementing the
standardised tasks because in the absence of standardisation, the people go back
to the old procedures that they were comfortable with the old procedures. New
procedures and adapting to them would take time. Some Kaizen events do not
involve a lot of people and derive more work with fever people.
6.6.2 TARGET AREAS OF KAIZEN TEAMS

You must have heard that organisations are adopting Kaizen philosophy or that
they are following a Kaizen strategy. It is because of the dual nature of Kaizen.
Kaizen is a part action plan and philosophy.
Kaizen helps bring changes when it is applied as an action plan. Organising Kaizen
events refer to the focusing on the specific areas for improving. Kaizen teaches
the people within the organisation to think differently in regards to their work.
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Use of Kaizen as an action plan, it brings in a culture that promotes continuous

improvement in an organisation. Kaizen events involve the following activities for
solving the problems :
Defining the problems and goals
Training the team and the employees
Updating and documenting the present state
Brainstorming and developing ideas for the future state
Implementing the ideas
Developing follow-up plans
Presenting results
Celebrating success
As a philosophy, Kaizen promotes empowerment of the employees, teamwork,
communication for solving problems and working on the improvements. Kaizen
events are normally targeted for short-term duration projects for improvements.
The Kaizen events work on small changes, which ultimately lead to bigger changes
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when the employees work on these changes with commitment. These events are
normally managed by the Kaizen facilitator with his team for implementation along
with other members of the area in which the Kaizen event is being conducted. The
changes implemented with the Kaizen events need to be sustained on a long term.
11. Kaizen events require effective planning. In these events, training is

provided to all employees involved in a project. These activities make
S elf the Kaizen teams effective in their roles. (True/False)
A ssessment
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Q uestions 12. Kaizen is a part of _______ and ________.
6.7 SUMMARY
Changes are made with an intent to develop a competitive advantage and providing
efficient and effective service delivery. A lean culture can bring about significant
and long-lasting changes by implementing incremental changes to the products
and the processes of an organisation. Changes must be brought in a systematic
manner. This is accomplished by using change management. Resistance and fear
associated with change are usually a result of individual and organisational beliefs
and can be considered as the root cause which hinders change implementation.
Change is a continuous process for betterment of organisation and it is

accompanied by resistance. Change requires consistent communication, training
and goal-setting. Various types of changes include unpredictable change, reactive
change, anticipatory change, planned change, incremental change, etc. Some of
the common causes of resistance to change are job loss, ineffective communication
and engagement, lack of trust, unknown future and poor timing. When planning
for changes, the management of an organisation should ideally involve employees
in the planning process. This practice ensures that the employees feel like the part
of the system and they are also involved in overall change processes.
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Lean Six Sigma, a combination of lean and Six Sigma that helps in eliminating
wastes, detecting and removing defects beforehand and improving the efficiency
and quality of the processes. It is necessary for organisations adopt to change to
meet the changing needs of their customers. Practicing Kaizen makes people work
together and create a favourable atmosphere for teamwork. Critical components of
Kaizen include teamwork, quality control, personal discipline, improved morale
and suggestions for improvement. Some benefits of using Kaizen include waste
reduction, optimum utilisation of resources, etc.
The Kaizen process for problem solving includes the following steps:
Start Gemba
Conduct Gembutsu
Take Temporary Measures
Root Cause Analysis
Standardise
Kaizen teams are important for business organisations since they work and helps
the organisation in improving the systems and maintaining progress in activities.
6.8 KEY WORDS

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Change: A process of transition from one situation to another.
Lean Six Sigma (LSS): An effective business management system which
minimises the time wastage and ensures the quality of products.
Fishbone diagram: An important tool of Kaizen for detecting the root causes
of problems.
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Gemba walk: To take a walk around the shop floor to observe the work in
action.
6.9 CASE STUDY: LEAN MANUFACTURING CABLES AND FACILITATING CHANGE

A global cable manufacturing company, GCM, is a producer of a wide variety of
cables and assemblies. GCM wanted to reduce its setup times and WIP (inventory).
They also had quality consistency issues which required immediate attention. The
production runs were long which did not allow bringing down the lead time.
GCM decided that it was necessary to use lean solutions to improve its manufacturing
processes. The first thing to do was to work on the setup and changeover functions
of important equipment. There were a number of ways to work on and streamline
the process. KanBans were implemented between the cable processing functions
which required upstream processes to stop producing products. These could not
be completed because of the resources and equipment running at full capacity.
This brought focus to the upstream equipment and processes. These production
areas were level-loaded with KanBans and new procedures were established.
The lean methods of visual workplace 5S methods were used for cleaning and
organising the machines and areas for maximum efficiency and rapid changes.
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The concept of producing near-perfect products was adopted. The products were
2,000 feet long which would take a lot of time and materials for manufacturing.
Preparation checklists and staging procedures were established in order to
maintain quality, follow-through and process integrity.
As a result of adopting to lean practices, machine setup times were improved

on their timing which resulted in immediate gains. Lead times dropped to an
average of 35 minutes and at times were below 17 minutes also. This resulted in
adding approximately 5 hours of extra up-time per machine, per day. This number
could have been much higher but with the ease of setups and changeovers made
the system more flexible for the product mix and resulted in an increase in the
changeovers.
Quality checks used to take over an hour. Now, they were put on a priority and
all the equipment and staff were allocated for completing this check. Known
products were given conditional acceptance to continue production, whereas the
inspectors conducted the first article check. This resulted in adding of up-time
and productivity. The unknown or unproven products were needed to go through
certain checks before their production could continue. At the end of the process,
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the company came to know that the present equipment was enough to take care
of not only the present demand but also for further future sales expectations for
some time.
Excellent teamwork and contributions were made by all the people involved in
improvement. Capacity of the production line increased by about 35% which
brought in large profits with the increase in sales per year.
Source: http://www.tpslean.com/resultsall.htm#antenna
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QUESTIONS
1. What were the problems faced by the global cable-manufacturing company
and how did decide to improve on their production process?
(Hint: Production issues, high set-up time, etc.)
2. How did the company benefit from the lean manufacturing processes?
(Hint: Increase in up-time, teamwork, increase in production by 35%, etc.)

1. Which methodology should be used for improving quality in a production
Exam Check system?
a. Six Sigma b. Kaizen
c. Kanban d. Just-in-time
2. Which of the following statements is not true with respect to change?
a. Changes reinforce the life values
b. Changes trigger progress
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c. Changes bring improvements

d. Changes generate profits
3. Which of the following is not an element of Kaizen?
a. Value Stream Mapping b. Quality Circle
c. Teamwork d. Personal Discipline
4. Kaizen process for problem solving comprises eight steps. Which of the
following is the eighth step?
a. Standardise
b. Develop counter-measures
c. Implement counter-measures
d. Monitor results and processes
5. Mapping a process in a diagram is called ______.
a. Data flow b. Audit
c. Workflow d. Circular
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6. Which factor needs to be considered while setting the quality standards?
a. Market demand b. Customers’ need
c. Production process d. Supplier demand
7. Kaizen events do not involve __________.
a. Communication
b. Defining the problems and goals
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c. Training the team and employees
d. Brainstorming and developing ideas for the future state
8. Which of the following statements with respect to lean is not correct?
a. Use creativity to find low-cost, small improvements
b. Never stop improving
c. Be reactive
d. Practise five-whys method
9. Choose the odd one out.
a. Temporary measures b. Counter-measures
c. Band-aid measures d. Inactive measures
10. What is the tool used in TQM to understand the sequence of events through
which the product goes through?
a. Flow chart b. Workflow
c. Pareto chart d. Taguchi map
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11. In the RCA process, the problem definition is succeeded by which step?
a. Corrective action b. Monitor the system
c. Identify the problem d. Identify the root cause
12. Which type of changes take place as a response to certain situations or a
chain of events?
a. Planned change b. Incremental change
c. Operational change d. Reactive change
13. What does PDCA stand for?
a. Problem, diagnosis, conclusion, action
b. Plan, do, check, act
c. Plan, diagnose, conclude, act
d. Purpose, develop, carry out, assess
14. Which of the following is not a similarity between Lean and Six Sigma?
a. Both have their origin in complex manufacturing environments.
IT b. Both focus on removal of variability in processes.
c. Both are used to eliminate waste and improve process efficiencies.
d. Both are successful only if discipline and time management are present.
15. Which of the following focusses on organising the workplace with waste
elimination?
a. Poka-Yoke b. 5S
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c. TQM d. TPM
16. When processes go through ______ a number of times, it leads to improvements
in the system by making it more efficient.
17. Successful organisations look for ________ in their systems to keep ahead of
the competition in the industry.
18. Organisations are always on the lookout to improve the quality of their
products and services in line with the __________ or due to changes being
made by the competition.
19. An important objective of Kaizen is the elimination of waste, standardisation
of work, just-in-time delivery, use of efficient equipment and quality control.
The changes are made ________.
20. Looking at the ________, one can decide which problems need to be addressed
on priority.
21. Gemba can be used in multiple industries, but the most common use of this
process is in __________.
22. Kaizen teams work on the problems and gather their own information and
facts after monitoring the situation and observing the problem. (True/False)
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23. Small changes result in creating a better and robust system. (True/False)
24. Abrupt changes make employees feel secure. (True/False)
25. Lean is a program aiming at eliminating variability and reducing risk. (True/
False)

1. Match the following
List 1 List 2
1. Kakushin i. Transformation of mind
2. Kaikaku ii. Continuous improvement
3. Kaizen iii. Innovation
a. 1 – i; 2 – ii; 3 – iii
b. 1 – ii; 2 – i; 3 – iii
c. 1 – ii; 2 – iii; 3 – i
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d. 1 – iii; 2 – i; 3 – ii
2. Daniel Burrus stated, “In the world where change is going on at an exceptional
rate, reacting fast has less of a payoff every year. You have got to find a way
to get ahead.” Which type of change might Daniel be hinting at?
a. Strategic change
b. Directional change
c. Planned change
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d. Anticipatory change
3. Resistance to change may be lowered by __________.
i. Proper timing
ii. Improving trust and communication
iii. Job assurance
a. i and iii
b. iii and ii
c. i and ii
d. only ii
4. Pick the odd one out.
a. Kaizen event
b. VSM
c. Muda
d. Control chart
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5. Observe the following image carefully:

Source: https://www.mrcpa.org/events/
Which lean practice is shown in this image?

a. Gemba walk b. Kaizen event
c. TQM d. SPC
6.12 ANSWER KEY

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Topic Q. No. Answer

Change 1. Change management
2. True
Resistance to Change 3. planning
4. False
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Organisational Change 5. True
Kaizen 6. manufacturing processes
7. Teamwork and personal discipline
Kaizen Process for Problem Solving 8. True
9. c. Prepare a team
10. Gemba; Gembutsu; Genjitsu
Kaizen Teams 11. True
12. action plan; philosophy
Q. No. Answer
1. a. Six Sigma
2. d. Changes generate profits
3. a. Value Stream Mapping
4. a. Standardise
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Q. No. Answer
5. c. Workflow
6. b. Customers’ need
7. a. Communication
8. c. Be reactive
9. d. Inactive measures
10. c. Pareto chart
11. d. Identify the root cause
12. d. Reactive change
13. b. Plan, do, check, act
14. b. Both focus on removal of variability in processes.
15. b. 5S
16. lean cycle
17. changes
18. changing demands of the customers
19.
20.
21.
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incrementally
Pareto chart
manufacturing
22. True
23. True
24. False
25. False
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Q. No. Answer
1. b. 1 – ii; 2 – i; 3 – iii
2. d. Anticipatory change
3. c. i and ii
4. d. Control chart
5. a. Gemba walk
@ SUGGESTED BOOKS
Little, J. (2014). Lean Change Management. [S.l.]: Happy Melly Express.
177
E-REFERENCES
What is Lean Six Sigma? - GoLeanSixSigma.com. (2019). Retrieved 7 August
2019, from https://goleansixsigma.com/what-is-lean-six-sigma/
How to Spot Resistance to Change in Your Company. (2019). Retrieved 7
August 2019, from https://www.thebalancecareers.com/what-is-resistance-
to-change-1918240
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CHAPTER
7
KAIKAKU AND KAKUSHIN
Table of Contents
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Chapter Objectives
Introduction
Learning Outcomes
7.1 Radical Change Method (Kaikaku)
7.1.1 Ten Commandments of Kaikaku
7.1.2 Kaizen Vs. Kaikaku
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7.2 Five Whys Technique
7.2.1 Origin of the Concept
7.2.2 Kaikaku and Five Whys
7.3 Concept of Kakushin (Innovation)
7.3.1 Difference Between Kaizen, Kaikaku and Kakushin
7.4 Summary
7.5 Key Words
7.6 Case Study
7.9 Answer Key
 Describe the concept of Kaikaku

 Explain the ten commandments of Kaikaku
 Differentiate between Kaizen and Kaikaku
 Discuss the Five Whys technique
 Describe the origin of the Five Whys technique
 Establish the relationship between Kaikaku and the Five Whys technique
 Describe the concept of Kakushin or innovation
 List and explain the differences among Kaikaku, Kaizen and Kakushin
INTRODUCTION
Read
Pre-read Connect
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In the previous chapter, you studied about facilitating organisational change
through Kaizen. You also learned that organisational change can be achieved by
practising Kaizen, Kaikaku and Kakushin. Kaizen, Kaikaku and Kakushin are
called the three faces of change. You have already studied about Kaizen in detail.
Now, you will study about Kaikaku and Kakushin in this chapter.
The second face of change, Kaikaku emphasises on radical and revolutionary

changes. It attempts to bring about big improvements by implementing big
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changes in the existing systems, processes and mechanisms of production. This
results in bringing reformations and transformations in the work culture and
employee habits. This ultimately helps the organisation reach great heights. The
top management officials and executives initiate and invest in Kaikaku, which is a
wide-ranging and large-scale activity.
Kaikaku changes are usually decisions that are communicated from the top
management till the bottom-level employees because the changes are large and
expensive. Kaikaku is practised by following the ten commandments of Kaikaku.
One of the key commandments suggests asking Five Whys. This has been
developed as a full-fledged technique which is used by lean practitioners.
The third face of change, Kakushin emphasises on the importance of innovation

and creating breakthrough products, services, processes or concepts. Such
breakthrough concepts may carry huge potential and can be developed into
products or even industries. All the three faces of change, viz., Kaizen, Kaikaku
and Kakushin are different from each other. Yet they are complementary and an
organisation should ideally use a combination of these to attain growth.
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Kaikaku and Kakushin
LEARNING OUTCOMES
Propose how Kaikaku can be used in a particular industry and what
would be its potential benefits
Manage complex problems or situations by making use of Kaikaku
Produce the list of possible causes of a problem by applying the Five Whys
technique
Develop simple but unique production systems for small scale
organisations
7.1 RADICAL CHANGE METHOD (KAIKAKU)

Kaikaku is a Japanese word which means “radical change” or “transformation of
mind”. Kaikaku is a lean management technique for making radical, significant
N ote
Kaizen events are
also known as
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and fundamental changes in the organisation. Kaikaku is quite different from
Kaizen. Kaizen involves small, continual and slow changes whereas Kaikaku
involves major and one-time changes.
Kaizen Blitz.
The concepts of Kaikaku and Kaizen are not mutually exclusive. They have
their respective and distinct positions in the collection of lean instruments of the
organisation. They both have their place in an organisation’s arsenal of lean tools.
Kaikaku is not used in place of Kaizen but used in addition to Kaizen. In most of
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the scenarios, Kaikaku is used in the beginning whereas a long term transformation
is provided by Kaizen.
Kaikaku and Kaizen events can be similar in some aspects. However, this is on
a large scale and making basic changes. These three concepts of performance
improvement are characterised as:
Kaizen involves a gradual and slow change of an already existing process,
system or practice.
Kaizen Blitz involves rapid changes related to a particular aspect of a process
or system.
Kaikaku involves total replacement or upgrade of a process or a system.
Typically, both Kaizen and Kaikaku are applicable. The purpose of Kaikaku is
to bring about radical changes, but Kaizen attempts to maintain that change and
bring about additional improvements. The aim of Kaikaku is to eliminate waste
and create a greater value. In organisations, Kaikaku usually means introducing
significant changes in the processes or systems in order to achieve marked
improvements.
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Figure 1 presents a pictorial description of Kaizen and Kaikaku:
Figure 1: Kaizen vs. Kaikaku
Source: https://marketbusinessnews.com/financial-glossary/kaikaku/
Today, the speed of change and improvements are extremely high and keeping
IT
in mind the pace of improvements, it has become essential to adopt Kaikaku, in
addition to continuous and incremental improvements that can be achieved by using
Kaizen. Kaikaku has become essential especially for small business organisations
to attain a competitive edge and become profitable. Today, the organisations’
success is dependent on combining the Kaizen and Kaikaku methods. By adopting
Kaizen, the organisations can improve the existing products and processes. In
contrast, by adopting Kaikaku, an organisation can achieve radical improvements
and innovations. According to Hoerl and Gardner, organisations which seek
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long-term success require a balanced approach to business improvement,
including methods for basic problem-solving, continuous improvement, as well
as identifying opportunities for disruptive innovation.
Kaizen is characterised by small step improvements that are continuous and

are process- and people-oriented, whereas Kaikaku is characterised by episodic
occurrences which bring necessary changes and sizeable results. Kaikaku initiatives
are driven from top to bottom.
It has been seen that some organisations which are at the brink of collapse were
able to successfully pull themselves out of the danger zone, survive and ultimately
grow. Most of these organisations were able to do so because they implemented
radical and path-breaking changes effectively and quickly.
7.1.1 TEN COMMANDMENTS OF KAIKAKU

Hiroyuki Hirano was a JIT expert and the author of ‘5 Pillars of the Visual
Workplace’. In this book, he introduced the 5S System for continuous improvement
of operations. The ten commandments of Kaikaku compiled from this book are as
follows:
1. Throw out the traditional concept of manufacturing methods.
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2. Think about how the new method will work, not how it would not work.
3. Do not accept excuses; totally deny the status quo.
STUDY HINT
Study the
4. Do not seek perfection; a 50% implementation rate is fine as long as it is done
interrelationship on the spot.
between Kaizen and
agile methodology. 5. Correct mistakes the moment they are found.
6. Do not spend money on Kaikaku.
7. Problems give you a chance to use your brains.
8. Ask “why” five times.
9. Ten persons’ ideas are better than one person’s knowledge.
10. Kaikaku knows no limits.
Implementing Kaikaku in an organisation is similar to conducting an explosion
in the organisation. Kaikaku tries to eliminate traditional thinking patterns and
break existing paradigms.
7.1.2 KAIZEN VS. KAIKAKU

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The differences between Kaizen and Kaikaku are listed in Table 1:
Table 1: Kaizen Vs. Kaikaku
S. No. Kaizen Kaikaku

1. It is both a bottom-up and top- It is a top-bottom approach.
bottom approach.
2. It is an evolutionary and incremental It is a revolutionary and rapid
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approach. approach.
3. Kaizen can be used individually. Mostly, Kaikaku is used in addition to
Kaizen and not in place of Kaizen.
4. Kaizen is implemented Kaikaku is first implemented as a
independently. precursor to Kaizen.
5. Kaizen promotes gradual and step- Kaikaku lets organisations transform
by-step changes. their culture, processes and business
models by implementing revolutionary
changes.
6. Kaizen has a small project scope. Kaikaku has a large project scope.
7. Staff and resource requirements are Staff and resource requirements are
low to medium. medium to high.
8. Kaizen is a tactical step. Kaikaku is a strategic step.
Kaizen and Kaikaku reinforce each other and are rather complimentary in nature
than competitive. Kaizen can be stimulated by Kaikaku, whereas, Kaikaku is
usually implemented after Kaizen. When deciding between Kaizen and Kaikaku,
the abilities of exploration and exploitation can be developed by employees who
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are involved in the iterative problem-solving activities. Making challenges and

issues noticeable for raising the sense of urgency is the beginning of the learning
process. The results and outcomes are made evident all around the organisation
after the issues are resolved. Lessons from successes or failures are learned by the
participants in Kaikaku activities. By doing so, even the most difficult challenges
can be handled by these employees who develop a sense of achievement and are
motivated. Since Kaizen is reactive and slow, therefore, Kaikaku is used by many
organisations to build-on Kaizen activities. Kaikaku is also implemented by some
organisations for making employees more creative and able to develop new ideas.
1. Which of the following is not a commandment of Kaikaku?

S elf a. Kaikaku knows no limits.
A ssessment
b. Ask “why” five times.
Q uestions
c. Do not spend money on Kaikaku.
d. Dream about the future state.
2. Which of the following options does not appropriately describe Kaikaku?
IT a. Makes employees more reactive
b. Makes employees creative
c. Makes employees solve difficult problems
d. Motivates employees
7.2 FIVE WHYS TECHNIQUE

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In order to weed out the problems and pursue excellence, it is important to first
find out the root causes of problems. It is important to know why an improvement
is needed in order to make improvements in the actual problem areas. An
organisation should ask ‘why’ an improvement is needed before it asks ‘what
improvement is needed’, ‘how it needs to be implemented’, and ‘when will it be
implemented’.
Learning organisations are known for repeatedly asking ‘why’ in order to find
out the root causes of the problems and to aid in the decision-making process.
The Five Whys technique was developed by Sakichi Toyoda and later used in
Toyota’s manufacturing methodology. This technique is introduced to all new
joinees at Toyota as a part of induction in the Toyota Production System.
The Five Whys technique is an easy way to solve problems. It is a technique of

asking questions and to study the cause and effect relationship regarding a specific
issue. Determining the cause or source of a particular problem or defect is the
primary purpose of using the Five Whys technique.
It has been observed in most cases that apparent issues tend to obscure the real
issues and causes. The Five Whys technique attempts to make sure that not
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only the superficial symptoms, but also the root causes can be identified and
eliminated. Toyota introduced the Five Whys process for finding solutions to
issues in manufacturing processes. However, this technique is applicable to other
processes too. In order to discover the underlying issues, one can ask the question,
“Why this problem occurred?” and then, one can go deeper to find the root cause
by asking another ‘Why?’.
The focus can be shifted from the problem towards the root causes by asking ‘why’
five times. In this way, effective solutions to the issues can be found.
When to Use a Five Whys Technique

The Five Whys technique can be used for various scenarios, such as solving
problems, improving quality, troubleshooting. However, it is most effective for
finding solutions to moderately difficult or simple problems.
Solving a critical or complex situation through the Five Whys technique may not
be appropriate. This may be due to the fact that the Five Whys technique usually
concentrates on one or a few causes of the problem at hand. However, there can be
more causes than are revealed by the Five Whys technique. In such situations, one
IT
should prefer using techniques such as Failure Mode and Effects Analysis (FMEA)
or a Cause and Effect Analysis.
Although the Five Whys technique is extremely simple, yet it can help in quickly
identifying the root cause of the problem. Therefore, before moving on to detailed
analysis and complicated procedures or jumping to conclusions, one should give a
try to Five Whys technique whenever a process or a system does not work properly.
This technique is flexible and simple. This Five Whys technique can be used in
association with various other tools and techniques such as the Root Cause
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Analysis. This method is also associated with lean manufacturing and is used to
identify and eliminate wasteful practices and activities. Also, the analysis stage of
the Six Sigma quality improvement technique uses the Five Whys technique.
7.2.1 ORIGIN OF THE CONCEPT

The founder of Toyota Industries, Sakichi Toyoda, was a Japanese inventor and
Important
Concept industrialist. He is credited for the development of the Five Whys technique in
The Five Whys 1930. Toyoda was the founder of Toyota Industries. The Five Whys technique
technique helps became popular during the 1970s. It is still used by Toyota for resolving issues.
in generating
counter-measures Toyota adopted the Gemba or the ‘go and see’ philosophy and is still following it.
as against
solutions. A solution
This approach suggests that what someone in the boardroom thinks is happening
usually deals with is not as relevant as a detailed understanding of the actual happenings on the shop
the symptoms; floor. This information related to the shop floor forms the basis of its decision
whereas, counter- making. The Five Whys technique is the most effective when solutions are offered
measure refers
to an action or a by those who have actual experience of the concerned issue or process. Hence, it
set of actions that can be said that this technique is true to this tradition. Five whys is a very simple
aims at preventing method, and involves finding the root causes of a problem by asking ‘why?’ five
the problem from
times.
occurring again.
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7.2.2 KAIKAKU AND FIVE WHYS

Hiroyuki Hirano, in his ‘10 Kaikaku Commandments’, states that one should ask
‘why’ five times. This helps in providing a roadmap for radical improvements.
Norman Bodek, a Lean Manufacturing guru, made certain comments related to

the 10 commandments. In the mid-1980s, he took Dr. Shingo to Granville-Phillips,
a manufacturer of vacuum-testing equipment in Boulder, Colorado. Granville-
Phillips had brilliant engineers, but it took them four months to bring a new product
to market. Despite taking so much time, there were 97% defects as revealed in the
final inspection. Dr. Bills, the CEO of Granville-Phillips, asked Dr. Shingo to look
at their manufacturing process to see if he could help them become more efficient.
First, Shingo visited the place of origin of the process. Thereafter, Shingo went
to see the design engineers followed by a logical progression through the entire
manufacturing process. At each stage, the engineers and managers presented
the process problems to Dr. Shingo. Dr. Shingo observed all this very carefully
and asked the engineers some very basic questions. He loved to use the Five
Whys.
Five Whys is an extremely effective technique, which lets people use their brains
and challenge the ‘status quo’.
IT FIVE WHYS EXAMPLE
Example 1: A classic example of the use of Five Whys techniques as carried out
E xhibit
by Dr. Shingo at the Granville-Phillips is as follows:
“Why do we get soldering misconnects?” an engineer asked Dr. Shingo. His

answer was a question.
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“Why doesn’t the solder not 100% connect the pins to the board 100% of the
time?”
“Sometimes the solder does not melt properly,” an engineer would answer.
“Why does that happen?” asked Shingo.
“Maybe the solder’s temperature varies,” another said.
“Why would the temperature vary?” Shingo again would ask.
At first, the engineers stared into blank space until one said, “Something is
causing the temperature to vary!”
“Why does that happen, what could cause the temperature to vary?” Shingo
asked.
A bright light went on in the head of one engineer who said, “Maybe since
the unmelted solder drops into the solder bath in chunks, not smoothly, the
temperature drops at that moment, causing mismatches when the next board
is entered into the bath.”
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This was a classic example of the “Five Whys” process that Shingo was
demonstrating. Continue asking “why” until the answers are exhausted and
you have found the root cause.
“Brilliant,” Shingo shouted. “Now what can you do to prevent the solder
dropping in so drastically?”
Another engineer said, “We can reduce the incline for the solid solder so that
it would only slowly enter the melted path.”
Source: http://www.agile-factory.com/topics/Kaikaku/kaikaku-8-Ask-5-Why.aspx
Example 2: Problem statement – The client refused to pay the progress

payment.
1. Why did the client refuse to pay the progress payment?
Ans. Because we completed the activity late.
2. Why did we complete the activity late?
Ans. Because the activity took longer than estimated.
3. Why did the activity take longer than estimated?
IT
Ans. Because we couldn’t bring enough material for the activity.
4. Why didn’t we bring enough material?
Ans. Because we did not purchase on time.
5. Why didn’t we purchase the materials on time?
Ans. Because we did not analyse the work schedule.
Source: https://www.projectcubicle.com/5-whys-technique-5-why-analysis-examples/
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Shingo believed that there is always a fundamental reason or cause behind any
problem. He also suggested that it takes a deep investigation to solve any problem.
The Five Whys technique is simple yet powerful. At times, a problem may not be
solved by asking just Five Whys and in that case, one may have to ask ‘why’ ten
times or more to identify the causes of the problems.
3. What is the basic purpose of using a Five Whys technique?

S elf a. To solve problems
A ssessment
b. To find out the bigger problem
Q uestions
c. To find out the problems
d. To find out the process inconsistencies
7.3 CONCEPT OF KAKUSHIN (INNOVATION)

You have already studied that there are three lean concepts which can be applied
to bring change to an organisation. These include Kaizen, Kaikaku and Kakushin.
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It has already been stated that Kaizen emphasises small incremental changes,
whereas, Kaikaku involves implementing radical changes in a short span of
N ote time. By now, you should be able to clearly define Kaizen and Kaikaku and their
Any organisation underlying philosophy and principles. Let us now study the concept of Kakushin.
that has ever tried
consulting a lean Kakushin translates to innovation/reform/renewal. Kakushin implies that
specialist must
have heard three
the organisation does not look at what it is doing and does not try to improve
Japanese words, it. Rather, the organisation tries to do something transformative or radical or
namely Kaizen, innovative. Kaikaku leads to Kakushin. By using Kaizen, Kaikaku and Kakushin,
Kaikaku and an organisation can take advantage of continual improvement of its processes,
Kakushin.
transformation of its culture and can become an innovation and change leader.
The concept of Kakushin as a radical innovation was first mentioned by

Mr. Katsuaki Watanabe, the former President of Toyota during an interview with
Harvard Business Review and Wall Street Journal in 2007. According to Watanabe,
a new revolutionary reform in the production can be brought about if various
models of cars can be manufactured rapidly by designing more flexible production
lines and by halving the number of parts used in making the cars. This is Kakushin.
Any organisation that wishes to deliver sustainable and high-quality products and
IT
services to its customers and wants to achieve steady global growth, then, it must
apply a combination of Kaizen, Kaikaku and Kakushin.
Processes can be improved by bringing changes, which can be described as

innovation or creativity. Innovation itself can be described as a process. Let us
study about the 20–20 innovation process.
Innovation is the primary driver for an organisation’s revenue growth apart from
the option of restructuring and reengineering which most of the organisations
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have already exhausted. In the present scenario, organisations can rely on the
following four strategies for their revenue growth:
i. Geographic expansion
ii. Alliances, acquisitions and mergers
iii. Greater market penetration
iv. Product development and enhancement
Markets can be penetrated better by marketing innovation, and product
development and enhancement can be achieved by developing new and innovative
products and features. Innovation also brings cost advantages by making use
of process innovation and continuous improvement. In addition, innovation in
management processes is a potential and untapped resource for the organisation
to improve upon the value that they add to the value chain of key organisational
processes.
In order to remain competitive in the market, organisations may either differentiate

themselves from the competitors or achieve a low-cost position. In both the cases,
the organisation requires innovation. Continual practice of innovation and its
adaptation helps an amateur organisation turn into a thoroughly professional one.
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The 20-20 innovation process is presented in Figure 2 as follows:
Establish a sense of urgency
Create a guiding coalition
Update vision and strategy
Communicate the change vision
Empower broad-based changes to generate short-term wins
Consolidate gains to produce more changes
Anchor in the new culture

IT Figure 2: The 20-20 Innovation Process
Source: Charron, R., Harrington, H., Voehl, F., & Wiggin, H. (2015). The lean management systems
handbook (3rd ed.). Florida: CRC Press.
This 20-20 innovation model has been adopted from Dr. John Kotter’s 8-step
change model. Let us discuss the steps of the 202-20 innovation model.
The first step in the innovation model is establishing a sense of urgency. The top
management of the organisation must conduct meetings with all its staff members
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to make them understand the need for innovation and how not innovating can
lead to their downfall and even extinction. The second step is to create a guiding
coalition which means that a group of people who would be given the task of
driving innovation are associated together. The third step suggests updating the
vision and strategy of the organisation in order to reflect the innovation aspect.
The fourth step is an extremely important one as it involves communicating the
change and innovation vision of the organisation to all its members at all levels.
The fifth step involves the actual implementation of the innovative changes, which
usually lead to short-term wins and gains. In the sixth step, all the gains that are
generated are consolidated and used to drive even more innovation. The last step
in the innovation model is to establish a new culture that values and advocates
innovation and change.
There are six essential elements of the 20-20 innovation process. These are explained
as follows:
1. Generating the mindset: It involves creating innovative and decisive teams
and organisations.
2. Knowing the territory: This involves acquiring, storing and absorbing
strategic knowledge on a continuous basis.
3. Building relationships: An exchange of value builds loyalty and trust.
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4. Manging the journeys: An organisation’s journey to innovation involves

selecting the right projects to work on for the right reasons at the right time
and making use of the right tools.
5. Creating solutions: Innovation lies in designing new, unique and end-to-
end solutions. The solutions should be complete and should come with the
required support.
6. Delivering results: Another important element of promoting innovation is
by implementing effective solutions for complex problems and situations.
7.3.1 DIFFERENCE BETWEEN KAIZEN, KAIKAKU AND KAKUSHIN

Some of the major points of difference between Kaizen, Kaikaku and Kakushin are
described in Table 2:
Table 2: Difference between Kaizen, Kaikaku and Kakushin
S. No. Kaizen Kaikaku Kakushin

1. Kaizen is a Japanese Kaikaku is a Japanese Kakushin is a Japanese term,
term, which means term, which means which means transformative
change for better radical change or or innovative change.
IT 2.
or continuous
improvement.
A practice of Kaizen
transformation of mind.
A practice of Kaikaku A practice of Kakushin

involves bringing means bringing large- means bringing a paradigm
small incremental scale and revolutionary shift from the existing
improvements at changes at the situation at the workplace.
the workplace. workplace.
3. The focus of The focus of Kaikaku the focus of Kakushin is
Kaizen is on is on bringing big on the development of
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eliminating Muda improvements in one go. breakthrough ideas.
and improving
productivity.
4. Kaizen brings about Kaikaku brings about Kakushin brings about
a cultural change in a cultural change in a cultural changes but they are
a slow and phased sudden manner with a result of focussed thinking
manner. drastic changes. and conscious efforts.
5. All levels of Executives and top-level Only top management
employees are management employees employees are involved in
involved in Kaizen. are involved in Kaikaku. Kakushin.
6. Kaizen involves low Kaikaku involves Kakushin involves high risk
risk and low impact. medium risk and and high impact.
medium impact.
7. Techniques used Techniques used in Techniques used in
in implementation implementation of the implementation of
of Kaizen include Kaikaku include Kaizen, Kakushin include Kaizen,
quality circles, 5S asking ‘why’ five attribute listing, challenging
and 7+1 Ms. times, brainstorming, assumptions, systematic
overcoming inventive thinking, six
resistance, challenging thinking hats, radical
assumptions, creative improvements, reverse
problem-solving, etc. brainstorming, DMAIC, etc.
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S. No. Kaizen Kaikaku Kakushin

8. Kaizen takes less In comparison to In comparison to Kaikaku,
time, is inexpensive Kaizen, Kaikaku takes Kakushin takes more
and can be carried more time and involves time and more cost. Also,
out continuously. more cost. Also, it it cannot be carried out
cannot be carried out continuously.
continuously.
9. Improving or Replacing an obsolete Creating and introducing
adding new features technological a new product/process/
in an existing component with new service, which disrupts the
product is an one is an example of entire market is an example
example of Kaizen. Kaikaku. of Kakushin.
10. It can be described It can be described as It can be described as
as playing an old playing an old game playing a new game with
game in a better with new rules. new rules.
manner.
A pictorial representation of Kaizen, Kaikaku and Kakushin is presented in

Figure 3: IT
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Lots of smaller changes Big change Something new!!!
Figure 3: Kaizen, Kaikaku and Kakushin

Source: https://adammitchell.co.uk/2018/01/24/kaizen-kaikaku-kakushin-whats-the-difference/
Despite the fact that a number of differences exist among Kaizen, Kaikaku and
Kakushin, these three are complementary in nature. Kaizen acts as the base on
which Kaikaku and Kakushin can be built. Benefits to organisations include
continual improvement of processes and cultural transformation. In addition, a
culture of innovation is also established.
4. Quality circles are associated with __________.

S elf a. Kaizen b. Kaikaku
A ssessment
c. Kakushin d. All of these
Q uestions
5. Which of the following best describes Kakushin?
a. Change b. Innovation
c. Quality d. Improvement
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6. Which of the following is not a characteristic of Kakushin?

a. Focussed thinking b. Conscious efforts
c. Abrupt changes d. Cultural changes
Find out reasons responsible for limited literature being written about Kaikaku
and Kakushin as against Kaizen.
A ctivit y 1
7.4 SUMMARY
Organisational change can be made possible by practicing Kaizen, Kaikaku and
Kakushin, which are also known as the three faces of change. The first face of
change, Kaizen involves a gradual and slow change of an already existing process,
system or practice. The second face of change, Kaikaku, involves radical changes
such as the total replacement or upgrade of a process or a system. The third face
of change, Kaikaku, involves innovation and creation of breakthrough products,
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services, processes or concepts. Kaizen is a tactical approach; whereas, Kaikaku
and Kakushin are strategic approaches.
The ten commandments of Kaikaku are as follows:
1. Throw out the traditional concept of manufacturing methods
2. Think about how the new method will work, not how it would not work
3. Do not accept excuses; totally deny the status quo
4. Do not seek perfection; a 50% implementation rate is fine as long as it is done
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on the spot
5. Correct mistakes the moment they are found
6. Do not spend money on Kaikaku
7. Problems give you a chance to use your brains
8. Ask “why” five times
9. Ten persons’ ideas are better than one person’s knowledge
10. Kaikaku knows no limits
The founder of Toyota Industries, Sakichi Toyoda, was a Japanese inventor and
industrialist. He is credited for the development of the Five Whys technique in
1930. The Five Whys technique is an easy way to solve problems. It is a technique of
asking ‘why’ questions repeatedly to determine the cause or source of a particular
problem or defect. It is most effective for finding solutions to moderately difficult
or simple problems. Solving a critical or complex situation through the Five
Whys technique may not be appropriate. Hiroyuki Hirano in his “10 Kaikaku
Commandments” states that one should ask ‘why’ five times.
Kakushin involves innovation. Innovation is the primary driver for an
organisation’s revenue, which can be achieved by following the 20-20 innovation
process. Kakushin means bringing a paradigm shift.
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7.5 KEY WORDS

Commandment: A rule that must be adhered to strictly
Failure Mode and Effects Analysis (FMEA): A technique to find out and
analyse the potential design problems related to a process or product or
system
Innovation: A process or an action that leads to the development of something
new, such as a new process or a new product
Kaikaku: A Japanese word for making radical changes
Kakushin: A Japanese word for innovation
Radical change: A change that happens at a rapid pace and completely
modifies the subject to which it was applied
7.6 CASE STUDY: NISSAN MOTOR’S KAIZEN PHILOSOPHY
In February 1984, Nissan Motor Manufacturing (UK) Ltd. and the U.K. Government
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entered into an agreement to build a car plant. The car plant was to be established
near Sunderland in the North East of England.
Nissan aimed at building a high-quality and profitable car which could be sold
in Europe. The organisation also wanted to achieve the maximum customer
satisfaction as well as employee satisfaction. It wanted to prosper in addition
to creating a culture of mutual trust and cooperation among employees. The
organisation also wanted that its employees gain long-term job satisfaction.
During those days, Kaizen was a buzzword in Sunderland. Kaizen is a Japanese

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term, which translates to ‘continuous improvement’. The improvements are gained
by implementing slow and steady changes. Once a change has been achieved, it is
maintained at that level till the next step of improvement takes place.
In the 1950s, two prominent American specialists, Deming and Juran, visited Japan
and helped the Japanese in improving their product quality. The quality circles
were first formed around 1962. It is estimated that in the late 1990s, Nissan Japan
had over 4,000 quality circles and there are over 10 million members of quality
circles throughout Japan.
Nissan’s U.K. plant developed the Kaizen programme to replace the periodic
quality circle activity. This programme encouraged constant quality awareness
and was better suited to the needs and aspirations of the British workforce.
Kaizen assumes that all employees are involved in the change process, but it also
recognises that employee participation depends on individuals and whether they
feel a part of the Nissan team.
Nissan had a policy as follows:

All the employees can make a valuable contribution as individuals; however,
this contribution is most effective within a team environment.
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Kaizen team activity or quality circles help in developing leadership and

presentation skills in employees. In addition, it also enables people to
understand, acknowledge and learn from others.
Kaizen can enable employees’ participation in issues affecting their
workplace.
The Kaizen philosophy can be applied anywhere at any time and organisations
can encourage the employees to participate individually and as teams. By doing
so, they can learn how to analyse situations logically and factually. They can
discuss issues or problems meaningfully and efficiently. People who contribute to
the Kaizen activity include:
Leaders: Leaders are those employees who receive special training in the
Kaizen process and who are expected to apply these skills to team activities.
Members: Members are those employees who participate in activities and
are usually from the same work unit or area.
Specialists: Specialists are those employees who assist the teams with a
particular project.
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A steering committee used to develop the policies and guidelines under which the
Kaizen activity operates. The Kaizen process is designed to enable a team to move
on from the stage where they can deal with current problems or improvement
areas to the stage where they can identify and deal with potential problem areas
well before they happen.
QUESTIONS
1. How can the Kaizen approach improve employee motivation?
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(Hint: The Kaizen philosophy encourages everyone to participate and
discuss issues meaningfully and efficiently.)
2. Why did Nissan want its employees to feel a part of the team?
(Hint: For long-term prosperity of the enterprise and its staff.)

1. Which of the following is not an essential element for the 20-20 innovation
Exam Check model?
a. Building relationships
b. Managing journeys
c. Creating solutions
d. Reinforcement of change
2. Who introduced Kakushin as a radical innovation?
a. Katsuaki Watanabe
b. Hoerl and Gardner
194
c. Hiroyuki Hirano
d. Sakichi Toyoda
3. Which of the following characteristics is not associated with Kaikaku?
a. Large scale
b. Discrete time period
c. Deliberate activity
d. Incremental efforts
a. Compensation structure redesign
b. Business process reengineering
c. Equipment replacement
d. Appraisal system design
5. Which of the following strategies is/are not effective for revenue growth?
a. Geographic expansion
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b. Alliances, acquisitions and mergers
c. Greater number of employees
d. Product development and enhancement
6. Only __________ employees are involved in Kakushin.
a. top management
b. middle management
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c. lower management
d. administrative
7. A manufacturing unit is facing a problem. One of its three production lines
has stopped. The production manager constructs the problem statement as
‘the production line number 3 has stopped working’. To get to the root cause
using Five Whys, the production manager should start by asking which of
the following questions?
a. Can we meet production target using the remaining two production
lines?
b. Do the other two lines need to be relooked?
c. Why did production line 3 stop?
d. Why was production line 3 not repaired on time?
8. Which of the following sets of characteristics are not homogeneous?
a. Kaizen—small changes—people focus
b. Kaikaku—random changes—big improvement
c. Kakushin—people focus—revolutionary changes
d. Change leader—innovation—Kaizen
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9. An organisation, W, manufactures chocolates. It had bought its production

line machinery 10 years ago. One day, the production line halted because of
breakdown in the speed control drive. There was no control drive in spares.
The organisation searched for quotes for speed drive, but the particular
model had become obsolete. For W, which of the following solutions would
be most apt?
a. Repair the speed drive
b. Replace the speed drive
c. Replace the production line
d. Run the production line at a constant speed
10. To remain competitive in the market, organisations should not __________.
a. differentiate themselves from the competitors
b. fail to understand customer requirements
c. achieve a low-cost position
d. develop new products
IT
11. Which of the following is not one of the ten commandments of Kaikaku?
a. Ask why five times
b. Do not accept excuses
c. Seek perfection
d. Do not spend money on Kaikaku
12. New Product Development (NPD) is an example of __________.
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a. Kanban
b. Kakushin
c. Kaikaku
d. Kaizen
13. The 20-20 innovation model has been adapted from which of the following
change models?
a. Kotter’s model
b. Lewin’s model
c. McKinsey’s 7S model
d. ADKAR model
14. Which of the following areas are potential and untapped with respect to
innovation?
a. Product development
b. Continuous improvement
c. Marketing process
d. Management processes
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15. Which of the following is the fourth step of the 20-20 innovation model?
a. Consolidate gains to produce more change
b. Update the vision and strategy
c. Communicate the change vision
d. Empower broad-based change to generate short-term wins
16. The Five Whys technique lets the people challenge the __________.
17. An organisation that practises Kakushin can become a __________.
18. Dr. Shingo visited the Granville-Phillips, a manufacturer of vacuum testing
equipment in Boulder, Colorado. Granville-Phillips had brilliant engineers,
but it took them four months to bring a new product to market. Despite taking
so much time, there were ______ defects as revealed in the final inspection.
19. The __________ stage of the Six Sigma quality improvement technique uses
the Five Whys technique.
20. The primary purpose of using the Five Whys technique is __________.
21. Kaikaku is practised by following the ten __________.
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22. Kakushin emphasises on radical and revolutionary changes. (True/False)
23. Kakushin commandments suggest asking why five times. (True/False)
24. Kaikaku initiatives are driven from top to bottom. (True/False)
25. Staff and resource requirements are higher in Kaikaku than in Kaizen.
(True/False)

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1. Consider the following lists and select the correct option:
List 1 List 2
A. Kaizen i. New game, new rules
B. Kaikaku ii. Old game, old rules
C. Kakushin iii. Old game, new rules
a. A–i; B–ii; C–iii
b. A–ii; B–i; C–iii
c. A–ii; B–i; C–iii
d. A–ii; B–iii; C–i
2. AYF Ltd. is an FMCG company and it manufactures a variety of products,
like biscuits, bread, toothpaste, etc. Recently, AYF had launched a new
biscuit, but it had received various complaints regarding the excess amount
of sugar, biscuits being too hard, etc. Now, as a step to solve this problem,
which lean technique should AYF use?
a. Cause and effect b. 5S
c. Five Whys d. FMEA
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3. Consider the following image:
4th Industrial Revolution
Level of Complexity
Internet of Things, Big Data,
Cyber Physical Sys, AR and VR
3rd Industrial Revolution

Through the employment of electronics and IT for a
further automation of production
2nd Industrial Revolution

Through the introduction of specialised mass production with the aid of the
production line
1st Industrial Revolution

Through the introduction of production with the aid of steam power and later electricity
End of 18. Beginning of Beginning of 70s Today

Cent. 20. Cent. of 20. Century
Time
Source: https://www.manufacturing.net/article/2018/05/kaizen-paradox
The leap from Industry 3.0 to Industry 4.0 can be considered as an example
of __________.
a. Kaizen
IT b. Kanban
c. Kaikaku
d. Kakushin
4. An organisation should ask certain questions in order to solve a problem.
The questions include:
i. How can we implement improvements?
ii. Why is an improvement needed?
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iii. What improvement is needed?
iv. When to implement a solution?
Choose the correct order of options.
a. i W ii W iii W iv
b. ii W iii W i W iv
c. iii W ii W iv W i
d. i W iii W ii W iv
5. A chemical-testing lab was set up by Mahesh. Soon after his lab started
functioning, it was found that some tests were not being completed due to the
presence of dirt particles despite the fact that a strict policy was in place for
cleanliness and hygiene of the lab. Mahesh set-up a team of three engineers,
who developed a machine to detect and remove dirt particles as small as
0.002 mm. In this case, it could be said that Mahesh’s team of engineers had
pursued __________.
a. Kaizen
b. Kakushin
c. Kaikaku
d. Kanban
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7.9 ANSWER KEY
Topic Q. No. Answer

Radical Change Method (Kaikaku) 1. d. Dream about the future state
2. a. Makes the employees more
reactive
Five Whys Technique 3. c. To find out the problems
Concept of Kakushin (Innovation) 4. a. Kaizen
5. b. Innovation
6. c. Abrupt changes
Q. No. Answer
1.
2.
3.
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d. Reinforcement of change
a. Katsuaki Watanabe
d. Incremental efforts
4. b. Business process reengineering
5. c. Greater number of employees
6. a. top management
7. c. Why did production line 3 stop?
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8. d. Change leader—innovation—Kaizen
9. c. Replace the production line
10. b. fail to understand customer requirements
11. c. Seek perfection
12. b. Kakushin
13. a. Kotter’s model
14. d. Management processes
15. c. Communicate the change vision
16. status quo
17. change leader
18. 97%
19. analysis
20. determining the cause of the problem
21. commandments
22. False
23. False
24. True
25. True
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Q. No. Answer
1. d. A–ii; B–iii; C–i
2. c. Five Whys
3. d. Kakushin
4. b. ii W iii W i W iv
5. b. Kakushin
@ SUGGESTED BOOKS
Management Systems Handbook (3rd ed.). Florida: CRC Press.
Bodek, N. (2004). Kaikaku: The Power and Magic of Lean. Vancouver, BC: PCS
Press.
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Needham, D., & Dransfield, R. (2002). Business Studies for You. Cheltenham:
Nelson Thornes.
E-REFERENCES
Khatri, V. (2017). Kaizen Kaikaku Kakushin. Retrieved 20 August 2019, from
https://www.benchmarksixsigma.com/forum/topic/34872-kaizen-kaikaku-
kakushin/
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Mitchell, A. (2018). Kaizen, Kaikaku & Kakushin – what’s the difference?.
Retrieved 20 August 2019, from https://adammitchell.co.uk/2018/01/24/
kaizen-kaikaku-kakushin-whats-the-difference/
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CHAPTER
8
LEAN SIX SIGMA
Table of Contents
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Chapter Objectives
Introduction
Learning Outcomes
8.1 Meaning of Six Sigma
8.1.1 History of Six Sigma
8.1.2 Benefits of Six Sigma in an Organisation
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8.2 Six Sigma Process
8.3 Sigma Levels and Six Sigma Metrics
8.3.1 Defects Per Opportunity (DPO)
8.3.2 Defects Per Million Opportunities (DPMO)
8.3.3 Process Capability and Sigma Level
8.3.4 Throughput Yield and Sigma Level
8.4 Concept of Lean Six Sigma
8.4.1 Benefits of Lean Six Sigma
8.4.2 Working of Lean Six Sigma
8.5 Summary
8.6 Key Words
8.7 Case Study
Table of Contents
8.10 Answer Key
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Lean Six Sigma
 Describe the concept and history of Six Sigma

 Explain various benefits of Six Sigma
 Discuss the process of Six Sigma implementation
 Examine various metrics and levels of Six Sigma
 Describe the four important Six Sigma metrics, namely Defects Per Opportunity
(DPO), Defects Per Million Opportunities (DPMO), Process Capability, and
Throughput Yield (Yt)
 Explain the concept, working and benefits of Lean Six Sigma (LSS)
 Describe the concept, roles and targets of Kaizen teams
INTRODUCTION
Read
Pre-read Connect
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The first seven chapters of this book talked about the concept and various other
aspects of lean management. You studied about various tools, concepts, and
techniques of lean. In addition, most critical concepts, such as waste removal and
Kaizen were also covered. The opening sections of this chapter will explain the
concepts of Six Sigma and its importance. In the last section of this chapter, you
will study about the concept of Lean Six Sigma.
Lean Six Sigma is an improvement methodology that depends on team

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collaboration in order to enhance an organisation’s performance by
systematically reducing waste and minimising errors. It brings together
the practices of lean production and Six Sigma to remove eight types of
waste, namely imperfections, overproduction, pausing, non-utilised talent,
transportation, stock movement and additional processing. Lean Six Sigma
minimises process defects and waste along with the creation of a cultural
change.
203
LEARNING OUTCOMES
Propose whether an organisation should implement Six Sigma or Lean Six
Sigma methodology keeping in mind its needs
Compute Six Sigma metrics, such as Defects Per Opportunity (DPO),
Defects Per Million Opportunities (DPMO), Process Capability and
Throughput Yield (Yt) for any process
8.1 MEANING OF SIX SIGMA

In the last three-four decades, various factors have changed the world. Globalisation,
opening-up of economies, instant access to information, development of
breakthrough technologies, products and services, etc., have changed the way
businesses operate. In addition, these factors have also changed the way customers
behave in the market and their expectation levels. The old business models do not
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work today. There is relentless and aggressive competition in the market, which
requires that organisations leave no scope for errors and defects. The organisations
are expected to serve best quality products and services at the least possible price,
which exceeds customer expectations. In earlier days, organisations wanted to
gain customer satisfaction in order to remain in the business and generate profits.
This practice does not suffice now. Now, it has become important for organisations
to delight the customers. To this endeavour, Six Sigma has become essential. Six
Sigma is used for improving the process performance and production aimed at
customer delight.
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Six Sigma is a relatively new concept, which aims at minimising the defects to a
near zero level. Six Sigma is not a technique that can be applied by organisations
in their production systems to produce defect-free products, rather it can be
considered as a journey of an organisation who wants to improve productivity and
profitability. Six Sigma is not a theoretical concept, rather it is a practical, active
and statistical method to attain zero defects. It can be said that Six Sigma is not
something that is contemplated but done. A lot of organisations, such as General
Electric, Motorola, Telco, Tisco, Ford, Visteon, Thermax, Wipro, etc., have adopted
and practised Six Sigma and the results of these organisations have revealed that
Six Sigma can be extremely helpful in improving the bottom line. Employees of
Six Sigma organisations have learned the technique to improve and maintain the
quality improvement attained by the organisation.
The Six Sigma approach emphasises establishing consistency in all business and
production processes of the organisation. Maintaining consistency results in
quality improvement.
The American Society for Quality (ASQ) defines Six Sigma as a method that
provides organisations tools to improve the capability of their business processes. This
increase in performance and decrease in process variation helps lead to defect reduction and
improvement in profits, employee morale, and quality of products or services.
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Lean Six Sigma
Six Sigma can also be defined as a comprehensive system for achieving, sustaining
and maximising the success of a business. Six Sigma involves understanding
customers’ needs, data collection, statistical analysis, managing, improving and
reengineering of business processes.
According to Greg Brue, Six Sigma is a problem-solving technology that uses human
assets, data measurements and statistics to identify the vital few factors to decrease waste
and defects while increasing customer satisfaction, profit and shareholder value.
General Electronics defines Six Sigma as a vision of quality which equates with only
3.4 defects per million opportunities for each product or service transaction and strives for
perfection.
In its Annual Report of 1997, Jack Welch, the former CEO of GE (1981-2001), stated
that Six Sigma focuses on moving every process that touches our customers’ every product
and service toward near-perfect quality. He also asked and recommended that all employees
especially those who want to seek promotion and also senior executives be educated on the
Six Sigma technique.
Six Sigma is heavily dependent on statistics as it measures different business or

production processes in terms of defects. An organisation can be said to have
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achieved Six Sigma when its processes are nearly perfect.
Organisations that have achieved Six Sigma mean that their processes experience
only 3.4 defects per million opportunities (DPMO). The concept of DPMO will be
discussed in detail in a later section of this chapter.
Sigma (a Greek letter, σ) is a term in statistics that measures something called

standard deviation. When sigma is used in business organisations context, it is
indicative of the number of defects related to a process. It also helps organisations
determine the extent to which the process deviates from standards.
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Some of the important objectives of Six Sigma are as follows:
Achieving quality close to zero defects
Constantly improving the customer satisfaction levels
Improving process reliability
Reducing cycle time and lead time
Increasing productivity and profitability
Reducing cost of production
Improving process management
8.1.1 HISTORY OF SIX SIGMA

Formally, the Six Sigma approach came into being in the 1980s. However, the
N ote founding concepts of Six Sigma started developing when Quality Guru Philip
Crosby started advocating the concept of defect prevention. During 1957-65, he
In 1985, Bill
Smith coined the was working at Martin-Marietta, where he developed the concept of zero defects.
term ‘Six Sigma’ Back then, in the 1960s, the concept of no defects sounded rather impractical.
while working at However, twenty years later, the concept of nearly zero defects, i.e., only 0.0003%
Motorola. defects became a reality and Motorola started practising it. Motorola and its
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engineers are credited for the development of the Six Sigma concept. In the 1980s,
Motorola resolved to achieve 10-times reduction in their product-failure levels in
N ote a span of five years and, as a result, Six Sigma was developed. Motorola’s Bill
In 1987, Motorola Smith originally developed this concept. Apart from Philip Crosby’s zero defects
trademarked the concepts, Six Sigma is also based on Deming’s 14 points for management and
term ‘Six Sigma’.
Juran’s 10 steps to quality improvement.
Deming’s 14 points for management are as follows:

1. Create constancy of purpose for improving products and services.
2. Adopt the new philosophy.
3. Cease dependence on inspection to achieve quality.
4. End the practice of awarding business on price alone; instead, minimise total
cost by working with a single supplier.
5. Improve constantly and forever every process for planning, production and
service.
6. Institute training on the job.
7. Adopt and institute leadership.
IT
8. Drive out fear.
9. Break down barriers between staff areas.
10. Eliminate slogans, exhortations and targets for the workforce.
11. Eliminate numerical quotas for the workforce and numerical goals for
management.
12. Remove barriers that rob people of pride of workmanship, and eliminate the
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annual rating or merit system.
13. Institute a vigorous program of education and self-improvement for
everyone.
14. Put everybody in the company to work accomplishing the transformation.
Juran’s 10 steps of quality improvement are as follows:
1. Create awareness of the need and opportunity for improvement.
2. Set goals for improvement.
3. Organise to reach the goals.
4. Provide training throughout the organisation.
5. Carry out the projects to solve problems.
6. Report progress.
7. Give recognition.
8. Communicate results.
9. Keep score.
10. Maintain momentum by making annual improvement part of the regular
systems and processes of the company.
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Lean Six Sigma
Let us now study about the history of Six Sigma in the chronological order.
N ote The journey of the evolution of Six Sigma started in 1974 when Motorola sold
In 1988, Motorola its television business to Matsushita, a Japanese organisation. The new Japanese
became the first owners decided to make some drastic changes in the way the factory operated.
organisation Under its new management, Motorola’s television business started producing TV
to win the
sets with extremely low defects, i.e., around 1/20th of the previous defects. This
Malcolm Baldrige
Excellence Award made Motorola realise that it required to work on the quality of its products.
after it adopted Six Thereafter, Motorola started working towards quality improvement. In 1981, Bob
Sigma. Galvin became Motorola’s CEO. Soon after, Galvin decided that Motorola must
achieve a tenfold (10X) improvement in its performance over a span of five years.
In 1984, Mikel Harry joined Motorola where he worked closely with Bill Smith,
who was a veteran at Motorola. Harry described Bill Smith as the father of Six
Sigma. In 1985, Bill Smith prepared an internal report related to his research,
wherein he stated that the performance of a product after it reaches its owner and
the amount of rework done on the product during its manufacturing lifecycle are
related. This research report drew attention of Bob Galvin. Smith also discovered
that those items which were manufactured with less deviation from the standard
performed best after being delivered to customers. He also said that it was a real
IT
challenge to find ways to remove defects. Harry had developed a concept of logic
filter in his university days and he used it to develop a four-stage problem-solving
approach, MAIC, which stands for Measure, Analyse, Improve and Control. After
a few more years of research, the MAIC concept became a base framework over
which the Six Sigma concept was built.
Following all these developments, Galvin announced that Motorola would now
launch a long-term quality program known as ‘The Six Sigma Quality Program’
on 15th January, 1987. Six Sigma was instituted as a corporate program, wherein
it was established as the required capability level in order to achieve a DPMO
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level of 3.4. Galvin also announced that this new standard was to be applied in
all products, processes, services and administration. After Galvin’s Six Sigma
announcement, Motorola’s Corporate Policy Committee updated its quality goal
as: Improve product and service quality ten times by 1989, and at least one hundred-fold
by 1991. Achieve Six Sigma capability by 1992. With a deep sense of urgency, Galvin
spread dedication to quality to every facet of the corporation, and achieve a culture of
continual improvement to assure Total Customer Satisfaction. There is only one ultimate
goal: zero defects in everything we do.
After Motorola received the Malcom Bridge Quality Award in 1988 for its Six
Sigma programme, it started becoming popular and various industries started
adopting it.
In 1989, Harry became the head of Motorola’s Six Sigma Research Institute.
Galvin asked him to do short cycle quality information exchange and fast scattering
of value learning into an overall organisation. In order to meet up to this challenge,
Harry devised a Six Sigma implementation strategy, wherein he empowered all
the employees and equipped them with the required quality tools. This helped
in transfer of knowledge from quality engineers to all the employees of the
organisation.
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After this, Six Sigma became a popular phenomenon and various other
STUDY HINT organisations, such as GE, Texas Instruments, etc., started following suit.
After introducing
Six Sigma, GE
restructured its 8.1.2 BENEFITS OF SIX SIGMA IN AN ORGANISATION
incentive pay plan
according to which
Nowadays, Six Sigma has become an uber-cool concept due to the following
60% bonus was benefits:
dependent upon
financial results and Better product design: Six Sigma helps organisations design better products
40% was dependent with less waste and at lower costs.
upon Six Sigma
results. Improved quality: Six Sigma methodology produces the organisation-wide
synergy and lets all employees work together to improve quality, cut costs
and drive profitability.
Top-down approach: Six Sigma is a top-down approach and the
commitment of the management is the key to success of the organisation.
The top management can decide which strategies and policies should be
implemented and which should not be implemented.
Rapid and radical improvements: Quality initiatives, such as Quality
Circles, Kaizen and Quality Function Deployment (used extensively in
IT earlier days) produced incremental improvements. In today’s fast-changing
business world, improvements must be brought-in rapidly to match the pace
of changing technologies and changing customer requirements. Six Sigma
plays an important role in bringing radical changes in the way organisations
function.
Transforms the entire organisation: When Six Sigma is implemented, the
entire organisation has to face and incorporate rapid and radical changes.
No large changes can be brought about in a specific part of the organisation
without implementing adequate measures in the other parts. Therefore,
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organisations use Six Sigma initiatives, which enable the management in
taking a closer look at various functions and departments and their inter-
relationships. It boosts employee morale and helps in team building. It also
helps in developing leadership skills.
Provides a consistent metric: Six Sigma involves quantifiable measures
and targets. Specific defects, i.e., deviations from customer requirements
are identified and measured. Improvements in the performance of systems,
processes, etc., are also measured. It provides consistent and uniform
measures.
Customer focus and satisfaction: The benefit of constant measurements
is that the customer can compare his/her requirements with the standard
measurements. The organisation also becomes aware of the changes in the
market. It also helps in improving customer relations, reducing customer
complaints and gaining customer loyalty.
Continuous improvement process: Since Six Sigma is a measurement-based
initiative. The organisation that implements Six Sigma must keep itself
apprised of the customer’s requirements on a regular basis. A Six Sigma
initiative never stops. As described, Six Sigma initiatives are designed to
bring radical improvements. However, having a radical improvement system
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Lean Six Sigma
in place does not mean that the significance of continuous improvement

process can be undermined.
Apart from these, some other benefits of Six Sigma include a reduction in the
project life cycle, reduction in operating costs, increased motivation levels, and
better enterprise-level planning.
1. Organisations that have achieved ___________ mean that their processes

experience only 3.4 defects per million opportunities (DPMO).
S elf
A ssessment a. Organisational objective
Q uestions
b. Six Sigma
c. Lean production
d. None of these
2. Which of the following is not a benefit of Six Sigma?
a. Improved quality b. Better product design
c. Customer focus d. None of these
IT
List the names of at least 10 Indian organisations which have adopted Six
Sigma.
A ctivit y 1
8.2 SIX SIGMA PROCESS

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Six Sigma is a statistical approach for process improvement. The aim of Six Sigma
is to improve processes and increase customer and employee satisfaction by
reducing the variation in production and other processes. Reduced variation leads
to increased consistency in processes. Therefore, Six Sigma leads to continuous
process improvement and low defects. Six Sigma is implemented for process
quality improvement by using the DMAIC Model. DMAIC Model consists of five
steps as shown in Figure 1:
Define
Measure
Analyse
Improve
Control
Figure 1: DMAIC Model
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Let us now discuss the five steps of DMAIC Model as follows:

1. Define: In this stage, the possibilities for defects or quality problems within
each process are identified. In addition, the goals of process improvement
projects must also be identified. The quality problems can be arrived at by
using different statistical tools such as the regression analysis, design of
experiments, etc. The input to this stage is generated by using the Voice
of Customer (VOC), Voice of Employees (VOE), Voice of Business (VOB)
and Voice of Process (VOP). All these inputs help in identification of the
Six Sigma project and creation of a high-level process map and the project
charter. The quality problem, which requires a breakthrough solution, has
to be defined clearly in measurable terms. The problem selected should
consider the requirements of the customer and should be relevant to the
organisation’s business. The charter is signed and approved by the top
management. Defining a problem in the manufacturing area is easier as
compared to defining it in service areas. In this phase, the Critical to Quality
(CTQ) characteristics are measured using tools, such as Pareto Chart and
SIPOC (Suppliers, Inputs, Process, Outputs, Customers) diagram.
2. Measure: In this stage, the data related to the project scope is collected.
Also, this phase involves the identification of parameters that need to be
IT quantified, ways to measure these parameters, data collection and measuring
the parameters. Data collection plans that define what data is to be collected,
when, by whom, etc., are defined. After data has been collected, it is first
analysed by using frequency distribution, histograms and other tools. An
important task of this phase is to describe the current process capability. In
this phase, tools, such as process flowcharts, benchmarking, run charts and
process capability, etc., are used. Two important metrics, namely Defects Per
Million Opportunities (DPMO) and Process Sigma are also used.
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3. Analyse: In this stage, the root cause of process inefficiencies is determined.
The gap between the current and target performance levels along with its
causes are determined. This stage begins by listing all the possible causes
of the problem. The causes are verified and validated by using statistical
tools and results in a list of actual root causes, which need to be addressed
to improve the process and remove the problem. This phase is extremely
important because the overall Six Sigma project success depends on the
correct identification of the root causes. In this phase, tools, such as cause
and effect diagram, brainstorming, histogram, five-whys, hypothesis testing,
time series plots and scatterplot are used.
4. Improve: In this stage, all the potential solutions for solving the problem or for
improving the processes are devised. The ways or methods of implementing
solutions are also listed. Improvements are listed by consulting the process
owners. An action plan for implementing the improvements is devised.
The action plan is designed carefully keeping in mind the factors, such as
risk factors, customer feedback, employee feedback, customer satisfaction,
etc. This action plan contains the details, such as the actions to be taken, by
whom the actions will be executed and when will they be executed. After the
action plan has been devised, each potential solution or action is tested for its
effectiveness. Tools such as brainstorming, poka-yoke, simulation software,
prototyping, etc., are used in this phase for eliminating defects.
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Lean Six Sigma
This phase also involves determining the key process variables and their
effects on the CTQ characteristics. If the quality level of a process even after
N ote the implementation of improvement solution is less than thrice of sigma (3σ),
In the Improve then the solution is reworked to achieve a minimum level of 3σ.
stage, the
transition from 3σ 5. Control: In this stage, the plans to monitor and control the solutions are
to 6σ is carried out devised. These are called solution monitoring plans. The major activities in
by modifying the this stage are:
process design
to accommodate zz Defining and validating the monitoring system
greater variability
in the output zz Developing standards and procedures
and improving
the process zz Verifying the benefits and profit growth
by eliminating
defects.
zz Communicating with the stakeholders
In the control phase, the results incurred after implementing solutions are
evaluated. If the stakeholders feel the need, they can make changes, corrections
and modifications in the solutions. This stage can be considered as an intermittent
phase between current practices and systems and new practices. One of the most
critical activities of this stage involves providing training regarding all new
changes to all the stakeholders. This stage makes use of tools such as process sigma
IT
calculation, control charts, cost-saving calculations and control plan. It can be said
that the aim of this stage is to maintain the gains obtained from the Improve stage.
3. Which is the first stage of the Six Sigma process?

S elf a. Establishing control b. Improving
A ssessment
c. Measuring d. Defining
Q uestions
4. ________ is the stage at which route maps are created for closing the gap
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between current and target performance levels.
a. Analysing
b. Defining
c. Measuring
d. None of these
8.3 SIGMA LEVELS AND SIX SIGMA METRICS

The Six Sigma approach includes the word ‘sigma’, which is a statistical term.
In statistics, the Greek letter sigma (σ) is used to refer to the standard deviation.
Therefore, in statistical terms, Six Sigma measures the number of defects that the
processes create. A process that allows only 3.4 DPMO is considered to be a high-
quality process and is said to be operating at a Six Sigma level. As the sigma level
of the process or product increases, the number of defects decreases. Organisations
which operate at six sigma levels are considered superior to organisations operating
at three, four or five sigma levels.
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Before we can discuss sigma levels in greater detail, it is important to first discuss
some of the important six sigma metrics in the upcoming sections.
8.3.1 DEFECTS PER OPPORTUNITY (DPO)

Defects Per Opportunity (DPO) is equivalent to the total defects divided by the
Important
Concept total number of failure opportunities.
Any possible defect
that is relevant In calculating Six Sigma metrics, following notations are used:
from a customer’s
perspective is D = Number of Defects
called a defect
opportunity. It O = Number of Defect Opportunities
can be present
in processes, U = Number of Units Produced
products or
services. There TOP = Total Number of Failure Opportunities = O × U
may be several
aspects of a Before calculating DPO, we need to calculate Defects Per Unit (DPU), which is the
process, product or result of dividing the number of defects by the number of products. Mathematically,
service, but only the
aspects critical to a D
DPU =
customer would be
counted for defect
opportunity.
IT U
Mathematically, DPO can be calculated as:
DPU D D
DPO
= = =
O U× O TOP
Example: A battery cell manufacturer produces 5,000 units per day and it has
been observed that there are 8 defect opportunities. During a quality check, it was
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revealed that the number of defects in the total units produced were 100. In this
case, we can calculate the DPO as follows:
N ote D = 100
For each unit of
product that is O=8
produced, there
may be multiple U = 5000
opportunities for
the occurrence of D 100 1
defects.
DPU
= = = = 0.02
U 5000 50
DPU D 100 100

DPO
= = = = = 0.0025
O U× O 5000 × 8 40000
DPU D 100 100

DPO
= = = = = 0.0025
O U× O 5000 × 8 40000
In the next section, you will study about another Six Sigma metric, Defects Per
Million Opportunities (DPMO). Calculating DPO is an essential requirement for
the calculation of DPMO.
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Lean Six Sigma
8.3.2 DEFECTS PER MILLION OPPORTUNITIES (DPMO)

Defects Per Million Opportunities (DPMO) is Six Sigma metric that is calculated
by dividing the number of defects in the units produced by the total number of
defect opportunities and multiplying this result by one million. Stated simple,
Quick TIP
DPMO is the product of DPO and one million. The DPMO metric helps in
DPMO is also
referred to as standardising the number of defects at the opportunity level. By calculating
Non-conformities DPMO, it becomes possible to compare processes which have different complexity
Per Million levels. Mathematically,
Opportunities
(NPMO). DPMO = DPO × 106
Let us calculate the DPMO metric for our earlier example of the battery cell
Important
Concept manufacturer.
It must be
remembered that
DPMO = 0.0025 × 106 = 2500
the DPMO is a
measure of the A DPMO of 2500 means that there are a total of 2,500 defect opportunities.
opportunities
that a defect may A DPMO rate can be a useful bridge between product metrics to process metrics.
occur. In no way, For example, the DPMO metric can be calculated for each product type. DPMO
it means that all can be tracked in terms of the failure rate using daily time increments on a control
these defects have
realised or will
necessarily realise.
IT
chart. A Pareto chart could then be used to quantify the frequency of failure types
and can help in focussed process improvement efforts.
It must be noted that in manufacturing environment, In a manufacturing

environment, it is not always possible to calculate the total number of defects
by considering the total number of units. In such cases, the number of units U is
replaced by the sample size. The formula for DPU is modified as:
Number of Defects found in sample

DPU =
M
Sample Size
8.3.3 PROCESS CAPABILITY AND SIGMA LEVEL

From a theoretical point of view, process capability refers to the ability of a process
to work without producing defects or to produce the least number of defects.
Process capability is a metric that is used to define the goodness of a process.
Alternatively, process capability is also defined as the ability of a process to
produce goods within the specified limits. Process capability compares the voice
of the customer and the voice of the process.
Process capability is measured statistically by making use of process capability

index or process capability ratio. Process capability ratio measures the natural
variation as against the specified limits. This ratio also helps in comparing the
different processes with each other. This comparison reveals which process is
the most capable one. There are four process quality capability indices, namely
Cp, Cpk, Pp and Ppk. Cp and Cpk are capability rates, whereas Pp and Ppk are
performance rates. Cp and Pp are centralised rates, whereas Cpk and Ppk are
unilateral rates. The difference between capability rates and performance rates
helps in estimating the statistical population standard deviation. Please note that:
Cp = Process Capability
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Cp is an indicator of process capability.
Cpk = Process Capability Index
Cpk adjusts Cp for the effect of non-centralised distribution
Pp = Process Performance
Pp is an indicator of process performance.
Ppk = Process Performance Index
Ppk adjusts Pp for the effect of non-centralised distribution.
USL = Upper Specification Limit
LSL = Lower Specification Limit
UCL = Upper Control Limit
LCL = Lower Control Limit
Capability and performance formulae are as follows:
=Cp
(USL – LSL)
=
6σˆ
(USL – X)
ITPp
(USL – LSL)
6σˆ
(USL – X)
=Cp = PpU
3σˆ 3σ
(X – LSL) (X – LSL)
=Cp = PpL
3σˆ 3σ
=Cpk Min(CpU,
= CpL) Ppk Min(PpU, PpL)
(cpk > 1.33 is desirable) (Ppk > 1.33 is desirable)
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It is a measure of how well a process performs with respect to the voice of the
customer.
8.3.4 THROUGHPUT YIELD AND SIGMA LEVEL

Throughput Yield is a Lean Six Sigma metric, which is indicative of the ability of
a process to produce defect-free products. The Throughput Yield (Yt) is calculated
by using the Defects Per Unit (DPU) metric. Mathematically, Yt = 1 – DPU.
Let us again consider our previous example of the battery cell manufacturer. In
this case, his throughput yield will be:
Yt = 1 – 0.02 = 0.98
This value of Yt can be interpreted as 98% of the produced units having no defects.
It is extremely important to know how one can calculate the sigma level after
calculating process metrics. The process sigma level is determined with the help
of the DPMO metric. Look for the number closest to the value of DPMO under
defects per 10,00,000 in the Six Sigma table. This will be the Sigma value.
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Lean Six Sigma
The Six Sigma table is shown in Figure 2:
IT
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This table assumes a 1.5 sigma shift because processes tend to exhibit instability of that
magnitude over time. In other words, although statistical tables indicate that 3.4 defects/
million are achieved when 4.5 process standard deviations (Sigma) are between the
mean and the closest specification limit, the target is raised to 6.0 standard deviations to
accommodate adverse process shifts over time and still produce only 3.4 defects per million
opportunities
Figure 2: Six Sigma Table

Source: https://www.moresteam.com/toolbox/six-sigma-conversion-table.cfm
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5. ______ is a measure of the relation between the voice of the customer and
the voice of the process.
S elf
A ssessment a. Throughput yield b. Process capability
Q uestions
c. Defects per opportunity d. None of the above
6. ________ is calculated by multiplying DPO by one million.
a. Defects per million opportunity
b. Defects per opportunity
c. Throughput yield
d. All of these
8.4 CONCEPT OF LEAN SIX SIGMA

Lean Six Sigma (LSS) is a process improvement methodology that has been
developed by the fusion of lean and Six Sigma. LSS has been designed to
IT
eliminate defects, remove waste and inefficiency, reduce variation, improve
working conditions and provide a better response to customers’ needs. LSS
makes use of a combination of tools, methods and principles of Lean and Six
Sigma both for improving the products and processes. LSS involves team effort
and, if implemented effectively, leads to improved efficiency, improved process
performance and ultimately improved bottom-line.
Organisations practising lean aim to remove wastes, whereas, organisations

practising Six Sigma aim to achieve maximum process efficiency or minimum
process variations. Therefore, when an organisation implements LSS, it will be
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able to achieve twin goals of waste removal as well as minimisation of process
variation.
According to the American Society for Quality (ASQ), Lean Six Sigma is a fact-
based, data-driven philosophy of improvement that values defect prevention over defect
detection. It drives customer satisfaction and bottom-line results by reducing variation,
waste, and cycle time, while promoting the use of work standardization and flow, thereby
creating a competitive advantage. It applies anywhere variation and waste exist, and every
employee should be involved.
A visual representation of LSS is shown in Figure 3 as follows:
Figure 3: A visual representation of LSS

Source: https://www.process.st/six-sigma-principles/
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Lean Six Sigma
Some of the most important principles of LSS are as follows:

Focussing on the customer
Identifying the value stream
Managing, improving and smoothening of the process flows
Removing waste
Practising fact-based management
Reducing variation
Involving employees
Training employees
Undertaking improvement activities
8.4.1 BENEFITS OF LEAN SIX SIGMA

Some of the key benefits of LSS are as follows:
Increases profit: Using LSS results in streamlining of the processes due to
IT
which processes are completed faster in an efficient manner and within
budgeted costs. Alternatively, it can be said that LSS helps an organisation
manufacture maximum amount of products using the minimum possible
resources.
Decreases cost: LSS leads to cost reduction for an organisation in two ways.
First, LSS helps in the elimination of waste from all the processes without
having any negative impact on the product or process. Second, LSS helps
in effectively solving all the problems or defects in the product or service or
process. This helps in effectively reducing costs for the organisation.
M
Improves efficiency and effectiveness: LSS helps in improving the
productivity of an organisation in two ways. First, LSS leads an organisation
towards effectively producing goods and providing services to customers
according to their needs, which leads to customer satisfaction. Second, LSS
allows the organisation allocate resources to the improved processes in order
to give a boost to the organisation’s productivity and, hence, profits.
Develops effective teams: LSS practice helps in development of effective
and skilled employees as it involves employees in the overall improvement
process. Involvement leads to employees’ participation, engagement and
accountability. In addition, LSS helps in development of trust among all the
employees of the organisation and specifically among the team members.
Trust is built when transparency is established at all levels in the organisation.
It also involves creating an understanding how and why each member of the
organisation is important. LSS helps in developing a feeling of ownership
and accountability for their actions in employees. This is a development
which would help the organisation in its entire life cycle and it also increases
the chances of continued success for the organisation.
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8.4.2 WORKING OF LEAN SIX SIGMA

Lean Six Sigma methodology is used to fix problems. LSS can be implemented by
following the DMAIC process as follows:
Define: Define the problem and what must be done to fulfil and satisfy the
customer requirements.
Measure: All the relevant parameters of the process are measured to collect
relevant information.
Analyse: All the collected data is processed and analysed to discover the
causes of problems.
Improve: Implement a solution that will take care of the problem.
Control: Sustain improved outcomes.
7. Which of the following improvement methodologies value defect

prevention over defect detection?
S elf
A ssessment a. Lean management b. Lean Six Sigma
Q uestions
IT c. Lean enterprise d. Learning organisation
8. In the DMAIC process, what does M stand for?
a. Measure b. Mean
c. Monitor d. Metric
8.5 SUMMARY
M
The Six Sigma approach emphasises establishing consistency in all the business
and production processes of the organisation. Maintaining consistency results
in quality improvement. Organisations that have achieved Six Sigma mean that
their processes experience only 3.4 defects per million opportunities (DPMO). Six
Sigma is also based on Deming’s 14 points for management and Juran’s 10 steps to
quality improvement. Motorola and its engineers are credited for the development
of Six Sigma concept. Six Sigma has become an uber-cool concept due, benefits,
such as better product design, improved quality, rapid and radical improvements,
customer focus and satisfaction, etc. Six Sigma leads to the continuous process
improvement and low defects. Six Sigma is implemented for process quality
improvement by using the DMAIC Model which consists of five steps namely
define, measure, analyse, improve and control.
Defects Per Opportunity (DPO) is equivalent to total defects divided by the total
number of failure opportunities. Defects Per Unit (DPU) is the result of dividing the
number of defects by the number of products. Defects Per Million Opportunities
(DPMO) is Six Sigma metric that is calculated by dividing the number of defects
in the units produced by the total number of defect opportunities and multiplying
this result by one million. Process capability refers to the ability of a process to work
without producing defects or to produce the least number of defects. Throughput
Yield is a Lean Six Sigma metric which indicates the ability of a process to produce
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Lean Six Sigma
defect-free products. Lean Six Sigma (LSS) is a process improvement methodology

that has been developed by the fusion of lean and Six Sigma. LSS has been designed
to eliminate defects, remove waste and inefficiency. LSS can be implemented by
following the DMAIC process.
8.6 KEY WORDS

Six Sigma: A methodology aimed at minimising the defects to a near zero
level
Process capability: The ability of a process to work without producing
defects or to produce the least number of defects
Throughput Yield: A Six Sigma metric that calculates the ability of a process
to produce defect-free products by using the Defects per Unit (DPU) metric
Defects per Opportunity (DPO): Defects Per Opportunity (DPO) is equivalent
to total defects divided by the total number of failure opportunities
Defects per Million Opportunities (DPMO): The product of DPO and one
million
IT
8.7 CASE STUDY: STARBUCKS IMPLEMENTATION OF LEAN SIX SIGMA
Starbucks has grown from a stand-alone shop in Seattle to the largest coffeehouse
chain in the world in a period of 40 years. When entering a Starbucks outlet,
customers experience a sophisticated atmosphere with a smell of roasted beans
and calming jazz music. Young professionals are usually found working on their
notebooks. Earlier, Starbucks was not a big brand and like many other organisations,
Starbucks attended Global Six Sigma USA’s Lean Six Sigma training program after
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which they rolled out new operations in all their locations.
When you think about the concept of a coffeehouse, you usually imagine a calm
and relaxing environment wherein you picture yourself enjoying a flavourful
coffee and doing some odd chores like going through your mailbox. While this
image might be common for most coffeehouses, Starbucks differs from this fad.
Starbucks adapts its speed and accuracy in line with its customers’ expectations.
Customers, now expect that their choice of coffee should be made fresh and served
within minutes of placing order. Starbucks decided to implement Lean in order to
rise up to this challenge.
Starbucks’ management wanted to achieve the speed and efficiency with which
most fast-food restaurants work and at the same time satisfy its customers’
expectations. Starbucks knew that these dual goals may override each other. Taking
hint, Starbucks made two big changes with respect to how customers ordered their
coffee and their in-store experience. Starbucks provides new training techniques
for all its employees and specifically those who serve coffee, i.e., the baristas.
While Starbucks takes orders using cash registers, the baristas take customers’
orders before they make the payment. This practice reduces the waiting time for
the customer. Starbucks also speeds up the ordering process by accepting orders
placed through its mobile app. Customers can order their coffee beforehand using
the app and make payment and take away the same after they arrive at the store.
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In addition, Starbucks also places drinks that are organised by names at the bar
counter.
Source: https://www.6sigma.us/six-sigma-articles/six-sigma-case-study-starbucks/
QUESTIONS
1. What was the aim of Starbucks when it adopted Lean Six Sigma?
(Hint: Starbucks’ management wanted to achieve the speed and efficiency
with which most fast-food restaurants work and at the same time satisfy its
customers’ expectations.)
2. How did Starbucks improve its operations?
(Hint: By providing training techniques to employees and baristas.)

1. Choose the one which is incoherent when all the options are considered
Exam Check together.
IT a. Customer satisfaction
c. Process performance
b. Six Sigma
d. Zero defects
2. Which of the following is not a recognised activity in Six Sigma?
a. Customers’ needs and data collection
b. Statistical analysis
c. Waste removal
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d. Business process reengineering
3. Sigma (σ) is used to measure ____________.
a. Sample mean b. Standard deviation
c. Population mean d. Mean deviation
4. Choose the odd-one out.
a. Six Sigma reduces cycle time
b. Six Sigma increases profits
c. Six Sigma increases costs
d. Six Sigma is used only by manufacturers
5. Which of the prominent personalities first talked about defect prevention?
a. Bill Smith b. Philip Crosby
c. Joseph Juran d. Mikel Harry
6. Which of the following persons became the CEO of Motorola in 1981?
a. Bob Galvin b. Bill Smith
c. Mikel Harry d. Paul Galvin
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Lean Six Sigma
7. Six Sigma is implemented for process quality improvement by using the

DMAIC Model. DMAIC Model consists of five steps. Which of the following
inputs are used in the measuring stage to identify the possibilities for defects
or quality problems?
a. Voice of Customer b. Voice of Business
c. Voice of Process d. All of the above
8. The current process capability level is described in the _____ phase of
DMAIC.
a. Define b. Measure
c. Analyse d. Improve
9. The aim of the improve stage is to achieve a minimum _____ level.
a. 6σ b. 4.5σ
c. 3.4σ d. 3σ
10. Which of the following cannot be considered as an advantage of Six Sigma?
a. Quality improvement
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b. Rapid improvements
c. One-size fits all approach
d. Consistent metrics approach
11. Choose the most appropriate answer which will complete the given
statement: “In a process, the number of defects decreases with the ________.”
a. increase in sigma level
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b. quality improvement
c. cost reduction
d. decrease in defects per opportunity
12. What was Motorola’s ambitious goal when it started the Six Sigma
programme?
a. 5X improvement in 5 years
b. 5X improvement in 10 years
c. 10X improvement in 5 years
d. 10X improvement in 10 years
13. The DPO level of an organisation’s process is 0.05 and the number of
opportunities is 8. What will be its DPU level?
a. 0.00625 b. 0.0625
c. 0.016 d. 0.40
14. The DPU level of a process is x. What %age of products will have defects?
a. x% b. (1–x)%
c. (1–x)/100% d. 100/(1–x)%
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15. It is reported that there are 70,000 DPMO in a production line. Its approximate
sigma level will be _____.
a. 1.0 b. 0.8
c. 1.12 d. 1.25
16. Six Sigma aims at minimising the defects to a near _____ level.
17. Organisations practising the lean philosophy aim to remove wastes, whereas,
organisations practising Six Sigma aim to achieve the maximum process
efficiency or minimum ________.
18. LSS has been designed to eliminate defects, remove waste and _______, and
reduce variation.
19. In the formula for process capability, Cp, the difference between the upper
and lower specification limits is divided by ________.
20. ________ acts as a bridge between product metrics and process metrics.
21. It is true that Six Sigma signifies radical improvements but the radical
improvement system does not negate the ___________process.
22. LSS practises fact-based management. (True/False)
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23. Yt = 1 – DPO (True/False)
24. Cpk adjusts Cp for centralising distribution. (True/False)
25. In the measuring phase, tools, such as cause and effect diagram, brainstorming,
histogram, five-whys, hypothesis testing, etc., are used. (True/False)

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1. There is a plastic box making factory. This factory produces 1,00,000 boxes
per month. Repeated sampling has found that the number of defects is 56,000.
The throughput yield in this case will be _______.
a. 1.78 b. 1.56
c. 0.56 d. 0.44
2. A toothpaste manufacturing unit produces 2,00,000 toothpaste tubes per
month with a defect rate of 10%. The number of opportunities for defects is
5. In this case, DPMO will be _________.
a. 2000 b. 20,000
c. 5000 d. 50,000
3. What will be the process capability for a process that has a sigma level of
4, Lower Specification Limit (LSL) of 45.589 and Upper Specification Limit
(USL) of 45.611?
a. 0.00091
b. 0.00082
c. 0.00079
d. 0.0001
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Lean Six Sigma
4. A process has a DPMO of 12,000. It will have a sigma level of ________.

a. 3.5 b. 3.6
c. 3.7 d. 3.8
8.10 ANSWER KEY

Topic Q. No. Answer
Meaning of Six Sigma 1. b. Six Sigma
2. d. None of these
Six Sigma Process 3. d. Defining
4. a. Analysing
Sigma Levels and Six Sigma Metrics 5. b. Process capability
6. a. Defects per million opportunity
Concept of Lean Six Sigma 7. b. Lean Six Sigma
B.
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SHORT ANSWER QUESTIONS
8. a. Measure
Q. No. Answer
1. a. Customer satisfaction
2. c. Waste removal
3. b. Standard deviation
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4. d. Six Sigma is used only by manufacturers
5. b. Philip Crosby
6. a. Bob Galvin
7. d. All of these
8. b. Measure
9. d. 3σ
10. c. One-size fits all approach
11. a. increase in sigma level
12. c. 10X improvement in 5 years
13. d. 0.40
14. b. (1–x)%
15. a. 1.0
16. zero
17. process variations
18. inefficiency
19. 6σ
20. DPMO rate
21. continuous improvement
22. True
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Q. No. Answer
23. False
24. False
25. False

Q. No. Answer
1. d. 0.44
2. b. 20,000
3. a. 0.00091
4. c. 3.7
@ SUGGESTED BOOKS
IT

Taghizadegan, S. (2010). Essentials of Lean Six Sigma. Burlington: Elsevier
Science.
Morgan, J., & Brenig-Jones, M. (2016). Lean Six Sigma for Dummies. Chichester,
West Sussex, United Kingdom: Wiley Brand.
E-REFERENCES
How Does Lean Six Sigma Work? - GoLeanSixSigma.com. (2019). Retrieved
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26 August 2019, from https://goleansixsigma.com/how-does-lean-six-sigma-
work/
Greycampus. (2019). Retrieved 26 August 2019, from https://www.
greycampus.com/ blog/quality-management/a-brief-introduction-to-lean-
and-six-sigma-and-lean-six-sigma
Greycampus. (2019). Retrieved 26 August 2019, from https://www.
greycampus.com/ blog/quality-management/6-benefits-of-6-sigma
224
CHAPTER
9
LEAN MANAGEMENT USING
DMAIC/DMADV
Table of Contents
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Chapter Objectives
Introduction
Learning Outcomes
9.1 Goals of Lean Management
9.2 Concept of DMAIC
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9.2.1 Working of DMAIC
9.3 Concept of DMADV
9.3.1 Working of DMADV
9.4 Goals of DMAIC and DMADV
9.5 Integration of Lean with DMAIC/DMADV
9.6 Summary
9.7 Key Words
9.8 Case Study
9.11 Answer Key
 Explain the goals of lean management

 Describe the concept and working of DMAIC
 Explain the concept and working of DMADV
 Discuss the goals of DMAIC and DMADV
 Describe the benefits of integrating lean with DMAIC/DMADV
INTRODUCTION
Read In the previous chapter, you studied about the concepts of Six Sigma, its benefits
Pre-read Connect and implementation. With your previous knowledge of lean management and the
concepts introduced in the last chapter, you must also know that the combination
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of lean and Six Sigma gives rise to the concept of Lean Six Sigma.
Lean management is used to achieve continuous improvement in various industries,

such as manufacturing, retail, travel and healthcare. For delivering more value
to greater number of customers quickly, organisations use lean principles for
substantial improvement across various dimensions, like customer experiences,
productivity to quality, working environment, etc. The management of various
organisations finds lean principles as the best methods to re-energise their business
performance in terms of production processes, customer-oriented channels, back-
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office centres and other supporting functions. For many companies, using lean
tools has been a positive experience which has helped them with the transition
towards a stronger, more responsive and more resilient systems of operation. This
has been beneficial for lots of organisations with their networks and branches
globally.
The lean approach focusses on the elimination of any and all forms of Muda/waste
and on continuous improvement. In various manufacturing units globally, the
techniques for lean manufacturing are being used systematically for meeting the
increasing demands placed on manufacturers. More than 70% of the manufacturers
have adopted the lean techniques which were originally developed as a
methodology to make production processes highly efficient. Six Sigma focusses on
minimising process variations and is used by numerous organisations. Six Sigma
can be implemented by either DMAIC or DMADV process. Six Sigma and Lean
Management can be used together by implementing the Lean Six Sigma approach.
Lean tools can be used in each phase of Six Sigma implementation.
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Lean Management Using DMAIC/DMADV
LEARNING OUTCOMES
Propose the use of Six Sigma in an organisation
Propose whether an organisation should use DMAIC process or DMADV
process or a combination of both
Justify the use of Six Sigma and lean against each other along with valid
reasons
9.1 GOALS OF LEAN MANAGEMENT

Lean management was initially pioneered by the Toyota Production System in
the 1990s. Today, it has spread across the world and is used as a comprehensive
philosophy based on continuous improvement. It is a long-term approach for
improving quality that brings small continuous changes in the processes. Now,
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a large number of companies are using lean management and improving their
overall processes, systems and operations. The lean methodology has three major
objectives as follows:
To deliver value from the viewpoint of the customer
To reduce or eliminate waste (activities that do not add value to the end-
product)
To continually improve using incremental changes
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Lean philosophy is used widely throughout the manufacturing and service
industries. The goals and objectives of implementing a lean production system
are to achieve the position of competitive advantage. It encourages teams to work
towards efficient servicing of customer demands by reducing the lead times and
decreasing costs. Implementing lean principles is not limited only to cost-cutting or
improving customer satisfaction, but is also about changing the company culture
and creating a sustainable lean organisation. At first, it might be challenging for
many organisations to implement the changes in their operations and the supply
chains for achieving incremental changes, but with time and perseverance, they
can definitely implement lean. Let us reiterate the major goals of lean management
as follows:
Waste reduction or elimination: An important aspect of lean manufacturing
is to cut down on the waste or Muda due to unnecessary transportation,
inventory, movement, waiting, overproduction, defects, etc., as these lead to
wastage of time, money and efforts. Reducing wastage leads to costs savings
which in turn leads to an increase in the net profit for the organisation.
Quality improvement: Lean management helps in improving quality by
eliminating errors for attaining an optimum quality level without increasing
the operating costs. It is necessary for organisations to focus on producing
high-quality products to be ahead of the competition. The organisation must
focus on making better quality products.
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Customer satisfaction improvement: Improving customer satisfaction can

help the organisation gain a competitive edge by increasing the service and
product quality, reducing the lead time and offering competitive prices.
Optimum utilisation of resources: It is necessary for the manufacturing
organisations to aim at optimum utilisation of resources, like machines,
time, human resources, money, etc. The goal of lean management is to utilise
resources in accordance with the set standards of the enterprise.
Time reduction: Lean manufacturing reduces the lead time and helps the
organisation produce and market its goods at a faster pace. This is achieved
by reducing wastage and increasing the overall efficiency in the workplace.
Lean manufacturing standards benefit the company by lowering overhead
costs and producing goods at a rapid pace. This increases the sales revenues
for the organisation in the long-run.
Total cost reduction: Lean manufacturing reduces the production time,
which means that the products are produced at a faster rate which leads to a
reduction in the total cost. This helps organisations remain competitive.
1. Implementing lean principles is not limited only to cost-cutting or

S elf
A ssessment
Q uestions
IT improving customer satisfaction but is also about changing the company
__________ and creating a sustainable lean organisation.
2. Lean manufacturing reduces the production time. (True/False)
9.2 CONCEPT OF DMAIC

Define, Measure, Analyse, Improve and Control (DMAIC) is an important Six
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Sigma methodology. This is a data-driven quality technique that is used to improve
the processes. DMAIC can be implemented as a standalone quality improvement
methodology or as a part of other process improvement methodologies, such as
lean.
DMAIC is a part of overall Six Sigma methodology. It is a measurement-based

method which aims at improving the process and increasing customer satisfaction.
It is a simple and powerful method which helps the team in solving critical process
problems by exploring potential solutions and deciding upon a course of action
after evaluating and verifying all the possible solutions. The main purpose of
the DMAIC process is to reduce or minimise the process variations. Minimising
process variations leads to continuous improvements and gaining required
outcomes from the processes.
Six Sigma uses the DMAIC model for achieving quality and process improvement.
DMAIC is pronounced as ‘de-may-ick’. You have already studied that the DMAIC
process consists of five phases, viz., Define, Measure, Analyse, Improve and
Control.
It is also the most preferred tool of LSS. However, it can also be implemented
as a standalone quality improvement methodology. The DMAIC methodology is
used for improving the efficiency and the effectiveness of any organisation. Six
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Sigma also makes use of the seven basic quality tools of DMAIC which include
the Ishikawa diagram (or cause and effect diagram), flowchart, pareto chart,
histogram, check sheet, scatter plot and control chart.
The working of DMAIC process is explained in the next section.
9.2.1 WORKING OF DMAIC

As discussed earlier, the DMAIC improvement methodology is data driven and is
used for improving the processes by finding the problems and inefficiencies and
providing solutions for them. The Six Sigma initiative involves implementation
of DMAIC process or methodology to minimise errors and improve customer
experience. DMAIC can be considered as a roadmap for implementing Six Sigma
and improving business processes. The objective of DMAIC is to achieve sustained
improvements along with stabilisation and optimisation of the processes.
According to H. James Harrington, the process of measurement is the first step that
leads to control and eventually to improvement. If you can’t measure something, you can’t
understand it. If you can’t understand it, you can’t control it. If you can’t control it, you
can’t improve it.
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It is necessary to measure and analyse the processes in order to identify the
problems and defects, and finding sustainable solutions for improvement and
maintaining control. The DMAIC process is a systematic one and jumping over or
missing out on important steps eventually increases the chances of success. You
have studied about the DMAIC process in the previous chapter, but in this section,
we will extend our discussion of each phase of this process as follows:
1. Define: In this stage, all the quality issues related to the process, product or
service are defined. Following questions must also be answered at this stage:
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N ote
zz Who are customers?
The DMAIC
process has a zz What are the quality parameters that are valued by the customers?
cyclical nature.
zz Which business processes are involved in meeting customers’
expectations?
zz What is the project scope and boundaries and what would be the start
and the end of the processes?
zz Which processes need to be improved? This activity involves process
flow mapping.
At this stage, the project charter defines the focus, scope and the reasons for
undertaking the improvement initiative. The feedback and inputs are also
collected in addition to creating a process flow map.
2. Measure: The purpose of this step is to collect relevant data for measuring
process performance. Some important activities in this phase include
developing a data collection plan, collecting data from different sources and
determining the types of defects. In addition, capability analysis is conducted
to assess the ability of the process to meet the required specifications. Pareto
charts are constructed in order to determine the frequency of problems or
defects.
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3. Analyse: The purpose of this step is to identify the root cause of the process
variation and defects and an investigation of the causes of defects and
N ote errors. In this stage, some important tools that are used include Root Cause
The DMAIC Analysis (RCA) and Failure Mode and Effects Analysis (FMEA). RCA is used
process has a for uncovering the causes of defects; whereas, FMEA is used to identify the
cyclical nature.
possible product, service and process failures. Additionally, multi-vari chart
is also used to identify the different types of variations within the processes.
4. Improve: The purpose of this stage is to improve upon the current process
by removing or eliminating the root causes of the problems and by offering
creative solutions. The solutions are usually derived by brainstorming which
provides solutions to fix and prevent the problems. In this stage, some
important tools that are used include Design of experiments (DOE) and
Kaizen events. DOE is used to solve problems related to complex processes
or systems involving various factors. Kaizen events are useful in bringing
rapid changes. Improvements can be bought by identifying root causes and
errors and developing innovative or creative solutions that are implemented
STUDY HINT using a proper implementation plan.
The overall DMAIC
process makes
5. Control: It must be ensured that all the improvements that were implemented
in the previous stage must be sustained by continually monitoring and
use of a variety
of tools including
affinity diagrams,
interrelationship
diagraphs,
IT keeping them under control. Sustainable improvements eventually lead to
long-term success. To keep a process under control, a quality control plan is
developed in which all the factors required to keep a process under control
histograms, project are documented. Statistical Process Control charts are used for monitoring
charter, process the process behaviour in an on-going manner. In addition, 5S and Poka-Yoke
flowchart, SIPOC, are also implemented.
stakeholder
analysis, VOC, The success of DMAIC process depends on employees having a good understanding
benchmarking, of the usefulness of the DMAIC process. DMAIC can help organisations improve
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brainstorming,
the quality of their products or services. Some of the advantages of using DMAIC
Cost-Benefit
Analysis (CBA), are:
control charts,
check sheets, CTQ, Higher revenue
Pareto chart, Value
Decreased costs
Stream Mapping
(VSM), etc. Increased productivity
3. The main purpose of the DMAIC process is to reduce or minimise

the __________, which lead to continuous improvements and gaining
S elf required outcomes from the processes.
A ssessment
Q uestions 4. DMAIC is considered as the base of the Six Sigma methodology.
(True/False)
9.3 CONCEPT OF DMADV

The DMAIC process is the most common and most frequently used methodology
for implementing the Six Sigma initiative. However, apart from DMAIC, DMADV
can also be used for implementing the Six Sigma initiative.
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The DMADV process is used for the development of new processes, services or
products. It is usually applied to new processes for ensuring that they achieve the
Six Sigma quality. Now that you are aware of the two methodologies using which
Six Sigma can be implemented, it is relevant to discuss which methodology should
be implemented when.
The DMAIC process should be used in case a product or process or service already
exists in the organisation, but is either not performing as required or is not meeting
customer specifications. On the contrary, DMADV should be used in two cases.
One, when a new product or service or process is to be developed, and the other,
when a product, process or service has been optimised using the DMAIC process,
but still does not meet the requirements. In this case, the concerned product or
process or service must be redesigned. DMADV is an acronym that stands for
Define, Measure, Analyse, Design and Verify.
DMADV has the objective of minimising the occurrence of errors and defects in
products, processes and services. DMADV takes into consideration customers’
needs while going through various processes. DMADV measures the customers’
requirements qualitatively by defining the Critical to Quality (CTQ) requirements.
Important activities that are carried out in the DMADV process include:

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Establishing customers’ needs
Evaluating and measuring customers’ needs
Looking for alternative processes, products or services which can meet
customers’ needs
Designing a business model for meeting customers’ needs
Validating or verifying the efficiency of the new model and the extent to
which it meets customers’ requirements
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Some of the tools used for designing the processes in the DMADV process include
QFD Matrix, Failure Mode Effects Analysis – FMEA, TRIZ, Brainstorming, Taguchi
Robust Design, DFX – Design for X, CTQ Matrix, Affinity Diagram, etc.
9.3.1 WORKING OF DMADV

The DMADV process is shown in Figure 1:
Define
Measure
Analyse
Design
Verify
Figure 1: DMADV Process
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DMADV is used for developing the design and creating right products, processes
or services the very first time after considering customers’ needs. DMADV works
by prioritising and quantifying customers’ needs for creating a specific product
or service design. A correct design means that the end-product would meet all
the customer needs. The progress of the product can be tracked using standard
measurable parameters. DMADV aims at redesigning the problematic product or
process. The first three phases of the DMAIC and DMADV process are similar.
The DMADV method creates a robust design that invariably prevents problems by
developing quality processes. Let us now study about each stage of the DMADV
process:
1. Define: The objective of this stage is to identify the goals of the project,
process or service from the standpoint of the organisation, employees,
customers and other stakeholders. The Define phase also includes activities
such as:
zz Determining the guidelines for the development of a product or process
or service
zz Determining the potential risks
IT zz
zz
zz
Determining the production schedule
Defining project goals with the focus on customer
Making use of competitor’s analysis and market forecast information
zz Creating the project plan and the project charter
2. Measure: The next step is to define the parameters which are important from
the perspective of customer. It is important here to determine which metrics
are critical to the stakeholder and to translate the customer requirements into
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clear project goals. Factors that are critical to quality (CTQ) are measured. For
this, it is important to define requirements and market segments, identify the
critical design parameters, and design scorecards. A design scorecard is used
to evaluate the design components, reassess risk and assess the production
process capability and product capability. Establish the best ways to measure
processes and prioritise the customer needs. In addition, the following
activities are also done:
zz Collecting customer requirements by making use of interviews, surveys
and the CTQ matrix for measuring and experimenting
zz Assessing the risks
zz Defining product capability for meeting customer needs
3. Analyse: At this stage, the following activities are conducted:
zz Developing design alternatives
zz Identifying a combination of requirements to achieve value within
constraints
zz Developing conceptual designs
zz Evaluating and selecting the best components
zz Developing the best possible design
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zz Verifying designs
zz Selecting the best design
zz Determining the total life-cycle cost
zz Identifying the improvement processes for the product and process
zz Selecting the innovative and better concepts
zz Using the sessions of brainstorming and affinity diagram
4. Design: The results of the analyse phase are used to design new processes or
products. At this stage, the conceptual and detailed designs are created for
the selected process or product. Once the important elements of the design
are agreed upon, the development of a high-level design for the process or
product begins. After this step, a prototype of the design is created to identify
where errors may occur so that the design can be reworked accordingly.
5. Verify (or Validate): The last step involves checking whether the end result
is acceptable to all the stakeholders or not. At this stage, a number of test runs
and production runs are carried out. The verify step also puts the process
or the product through routine operation for ensuring that the change is
sustainable in the long run. There should be regular feedbacks taken from
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the customers for incorporating the changes into future designs.
5. The DMADV method creates a __________ that invariably prevents

problems by developing quality processes.
S elf
A ssessment 6. The objective of the measure stage of DMADV is to identify the goals of
Q uestions the project, process or service from the standpoint of the organisation,
employees, customers and other stakeholders. (True/False)
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9.4 GOALS OF DMAIC AND DMADV
As discussed earlier, DMAIC and DMADV are the two widely used Six Sigma
methodologies. These are used for eliminating defects, solving problems or
developing new products, processes or services. The Six Sigma methodology was
developed based on the quality management concepts and tools, such as total
quality improvement, zero defects and quality control.
Six Sigma is a disciplined methodology which aims at error-free performance for

the business organisation. Using DMAIC and DMADV tools, the process defects
can be eliminated. An organisation can attain Six Sigma quality level by taking
care of the following factors:
Focus on customer
Management based on facts and figures
Focus on processes
Strong business management
Drive for excellence
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Some of the common goals of DMAIC and DMADV are as follows:
N ote Both of these are Six Sigma methodologies that are used for removing or
The DMADV minimising defects to a level of 3.4 DPMO or less.
process is also
Both of these are data-intensive approaches.
called Design for
Six Sigma (DFSS). Both of these are structured methods to reduce variation and solve problems.
Both these methods make use of teams for problem solving.
Both these methods involve collection and analysis of data using statistical
tools.
Both these techniques focus on the needs of the customers and on achieving
business and financial goals of the organisation.
Both methodologies are used for meeting the business and financial profits.
Both methodologies are implemented with the support of the process owners
and a team.
Although the ultimate goal of both DMAIC and DMADV is to reduce process
variation and both are based on systematic quantitative approaches to process
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improvement and process design, there are certain subtle differences between the
two. The differences between DMAIC and DMADV are shown in Table 1:
Table 1: Differences between DMAIC and DMADV
S. No. DMAIC DMADV

1. DMAIC is a process improvement DMADV is a tool that defines and
tool. creates processes, products or
services.
2. DMAIC process also involves inputs DMADV process gives liberty
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of process or product or service to process or product or service
designers, but in a rather restricted designers to use their creativity and
manner. innovation to build the best possible
design.
3. DMAIC follows a systems approach, DMADV strictly follows a systems
but not in a strict manner. approach.
4. The measure phase of DMAIC The measure phase of DMADV
measures the current process measures the expected process
performance levels. performance levels according to
customer requirements.
5. The future performance and The future performance and
efficiency of the process is monitored efficiency of the processes is checked
by using control systems. by conducting simulation tests.
The DMAIC approach improves an existing process or product incrementally. It

focusses on making changes and modifications with control on processes which
already exists for improving quality. DMADV, on the other hand, is part of the Six
Sigma methodology that focusses on customers and on designing the right process
or product at the initial stages. It is necessary to correctly quantify customer needs
for creating an end-product that would be able to meet those needs. A track of the
progress and work can be kept by using standard metrics. A combination of both
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methods helps solve problems, develop products and create rapid improvements
at a lower cost.
According to Anthony Velocci Jr, the Editor-in-Chief of the Aviation Week and
Space Technology, the process-improvement system known as Six Sigma is fast becoming
the Swiss Army Knife of aerospace manufacturing: a growing number of contractors see
it as a multipurpose tool of choice for reducing costs and improving customer satisfaction.
Organisations follow a traditional DMAIC approach for the improvement of a

process, product or service. However, if they realise that the process is beyond
general improvement, then they can look at an alternative for redesigning the
process. The process for redesigning requires the approval of the customer and
the support of the management.
Organisations usually implement both DMAIC and DMADV. DMAIC helps

in determining the root cause of the problems, whereas DMADV helps in the
development of new products or processes or services in addition to sustained
improvements in the systems. The organisations today have started integrating
the DMAIC model with DMADV tools and the concepts of designing with
redesigning. When DMAIC and DMADV approaches are combined together, a
new approach DMARC is developed.
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DMARC consists of five phases – Define, Measure, Analyse, Re-Design and Control.
The Re-Design phase is a collective term for the Measure-Analyse-Design-Verify
phases which are borrowed from DMADV methodology.
7. The process for redesigning requires the approval of the customer and
S elf __________.
A ssessment
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8. DMAIC is used to improve existing processes. (True/False)
Q uestions
9.5 INTEGRATION OF LEAN WITH DMAIC/DMADV

In the previous chapter, you have studied about the Lean Six Sigma methodology
that is developed by fusion of Lean and Six Sigma. Various organisations have used
LSS resulting in cost-savings, quality improvement and customer satisfaction.
Lean management aims at creating value for customers by reducing Non-Value-

Adding (NVA) activities and lead times. Lean also aims at improving the flow of
processes. Six Sigma focusses on reducing variation and improving process by
solving process problems using statistical tools. Lean Six Sigma (LSS) methodology
focusses on continuous improvement, elimination of waste and reduction of
variation from all the processes. Over a period of the last 3-4 decades, both lean
and Six Sigma methodologies have been used to achieve dramatic improvements
in cost, quality and time by focussing on process performances.
Various organisations, such as Toyota, General Electric, Motorola, etc., have

achieved various benefits by implementing either Six Sigma or lean. Following suit,
most organisations started implementing either of these methodologies based on
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their needs. However, using either one of these has certain limitations. Six Sigma is
used to eliminate defects, but it does not help in optimising the process flow. Lean
helps in identifying and removing wastes, but they do not make use of advanced
statistical tools that help in improving the process capabilities. Due to this, quality
practitioners consider that these two methods are complementary to each other.
While each approach can result in dramatic improvements, implementing both
these methods simultaneously helps in addressing all types of process problems
appropriately. For example, inventory reduction requires reducing batch sizes
and linking operations by using lean methodology and at the same time, Six Sigma
tools should be used to minimise process variation.
Lean philosophy integrates with the Six Sigma methodologies of DMAIC and/
or DMADV for reducing variations in the processes. These help in reducing the
costs and variability in processes with improving the overall quality and increase
in customer satisfaction. DMAIC takes the initiative of improving the existing
processes and DMADV techniques are used for developing and designing the new
processes, products or services.
The LSS process improvement approach usually includes:

Value stream mapping to determine the projects that are either Six Sigma or
IT

Lean
All employees are acquainted with the concept of Lean and Six Sigma
All the training material and contents should be customised as per the
requirements of the organisation
It has been discussed that using either Lean or Six Sigma has its own limitations.
But integration of lean thinking and Six Sigma, known as Lean Six Sigma (LSS), can
take care of all such limitations. Organisations now apply Lean Six Sigma concepts
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to reduce defects and increase value. The Lean Six Sigma framework is developed
for problem identification, providing suitable solutions to solve the problems and
sustaining the improvement over a long period.
Various lean tools that can be used in the different phases of DMAIC/DMADV
process are shown in Table 2:
Table 2: Lean Tools that can be Used in the Different Phases of DMAIC/DMADV
Phase of DMAIC/DMADV Lean Tools Applicable

Define zz Lean Kaizen Plan
zz Lean Value Stream Map (VSM)
Measure zz Lean benchmarking or scorecard
zz Current state charts (hand-off, spaghetti, process
maps, process flows)
zz Lean MSA
zz Lean qualitative measures assessment [Quality at
Source, point of use storage (POUS), continuous
flow, nine-waste checklists]
zz Lean quantitative analysis – Pareto analysis
(process defects)
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Phase of DMAIC/DMADV Lean Tools Applicable

Analyse zz 5 Whys
zz Current state charts analysis
zz Lean qualitative measures root cause analysis
(RCA)
zz Lean quantitative measures RCA
Improve/Design zz 5S and 7M tools
zz Apply 13 Lean tools—5S, Quality @ Source,
POUS, standardised work, cells, total productive
maintenance, facility layout, Single Minute
Exchange of Die (SMED), batch reduction, Kanban,
visual controls, VSM and Kaizen
zz Complete try storm pilot improvement projects
Control/Verify zz Lean sustainability – Kaizen action plans
zz Visual measures deployment
zz Lean educational plan deployment
zz Lean communications plan
zz Lean visual control charts
Lean visual management reporting
IT zz
Source: Charron, R., Harrington, H., Voehl, F., & Wiggin, H. The Lean Management Systems Handbook.
9. Six Sigma is used to eliminate defects, but it does not help in optimising
the __________.
S elf
A ssessment 10. Six Sigma helps in removing wastes, but it does not make use of statistical
Q uestions tools. (True/False)
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Using a combination of all available sources, prepare a list of at least 20 Indian
organisations which implement Lean Six Sigma.
A ctivit y 1
9.6 SUMMARY
The lean approach focusses on the elimination of any and all forms of Muda/waste
and on continuous improvement. Six Sigma focusses on minimising the process
variations. Six Sigma and Lean Management can be used together by implementing
the Lean Six Sigma approach.
Some of the major goals of lean management include waste reduction/elimination,

quality improvement, customer satisfaction improvement, optimum utilisation of
resources, etc.
DMAIC is a data-driven Six Sigma methodology that is used to improve the

processes. Six Sigma uses the DMAIC model for achieving quality and process
improvement. The objective of DMAIC is to achieve sustained improvements
along with stabilisation and optimisation of the processes. The DMAIC process
consists of five phases, viz., Define, Measure, Analyse, Improve and Control. Apart
from DMAIC, DMADV can also be used for implementing the Six Sigma initiative.
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The DMADV process is used for the development of new processes, services or
products. It is usually applied to new processes for ensuring that they achieve the
Six Sigma quality. DMADV measures the customers’ requirements qualitatively by
defining the Critical to Quality (CTQ) requirements. DMADV works by prioritising
and quantifying customers’ needs for creating a specific product or service design.
DMADV aims at redesigning the problematic product or process. The first three
phases of the DMAIC and DMADV processes are similar. The DMADV process
consists of five phases, viz., Define, Measure, Analyse, Define and Verify.
Although the ultimate goal of both DMAIC and DMADV is to reduce process
variation and both are based on systematic quantitative approaches to process
improvement and process design, there are certain subtle differences between
the two. DMAIC is a process improvement tool; whereas, DMADV is a tool that
defines and creates processes, products or services.
Lean Six Sigma (LSS) methodology focusses on continuous improvement,

elimination of waste and reduction of variation from all the processes.
9.7 KEY WORDS

IT

Lean Management: An approach that emphasises continuous improvement
for the overall organisation
DMAIC and DMADV: A tool for implementing Six Sigma initiatives
DMARC: A tool created by the integration of the DMAIC and DMADV
approaches
9.8 CASE STUDY: SIX SIGMA’S DMAIC METHODOLOGY—FOR A

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TYRE-MANUFACTURING COMPANY
Mable Continental was a tyre-manufacturing company located at Famalico in

Portugal. The company wanted to use the Six Sigma techniques for improving
the rubber extrusion process of two tyre products: the tread and the sidewall.
Their main objective was to reduce waste materials and processes. Since the tyre
manufacturing has been a very competitive business worldwide, it was necessary
to seek operational excellence with adapting to the flexibility of changes for
continuous improvement. The organisation wanted to implement Six Sigma for
working towards operational excellence and achieving success. Six Sigma has
already been implemented effectively and has proven its benefits in the automobile
industry with Toyota and Ford adopting these methodologies.
Mable Continental started its research on Six Sigma methodology and provided
a study related to the implementation of Six Sigma and how it can impact the
performance of the business. Their main focus was on improving the rubber
extrusion process which had the mixing, preparation and the construction
departments. The raw materials are sent to the mixing department where they
are transformed into compound sheets. The preparation department uses these
sheets on seven extrusion lines, which ensure the tread and sidewall extrusion.
The construction department is the main customer for the extrusion process. The
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output generated in terms of the amount of material generated in the process is

reused later for other purposes. This is a specific indicator for the organisation
regarding the efficiency of running operations. The company focussed on bringing
down the wastage by reducing the extra amount of material produced during the
tread and sidewall extrusion process.
They decided to implement the DMAIC cycle from the Six Sigma methodologies
to improve on their processes by reducing the wastage. They started the initiative
by defining the problem and drawing up the project charter, identifying the
problem and defining the scope of the project. They used tools like Gantt chart and
SIPOC diagram to work on the process with details to understand the relationship
between the inputs, suppliers and customers.
They then created the data collection plan by measuring the total amount of
rejected material during the extrusion process. In this manner, the company was
able to define the percentage of unused work-off material generated in the tread
and sidewall extrusion processes.
Once the data was collected, the organisation focussed on finding the root causes
of the defects in the process or variation in the number of materials wasted. For
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this, they used tools such as the Ishikawa diagram to understand the problem and
the generation of unused material. The Pareto chart was used to prioritise the main
causes which created an unfavourable impact.
The process led to their discovery of a machine in the sidewall extrusion process
that was not performing as required and due to this, there was an increase in the
extra material. Also, there was a problem in the tread extrusion process and they
discovered that the method for feeding machines was creating problems and the
machine was regularly getting jammed and had to be stopped.
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This helped them make a list of the problems and their root causes and the action
that should be taken to resolve the issue. This included the change in the equipment
and the machines and methods that were used by the workforce to put the
material into the machines. Once the changes were made with the improvements,
the data was collected with the improved systems. The improvement was on a
large scale where the amount of work reduced with the material to about six tons
per day. This resulted in big profits for the company which was approximately
USD 2,00,000. The company, Mable Continental, realised the importance of the
Six Sigma Methodology for achieving their objectives with the methodical and
disciplined approach to the problems at hand and working with DMAIC cycle.
Source: https://www.sixsigmadaily.com/case-study-tire-manufacturer-dmaic/
QUESTIONS
1. What were the problems that Mable Continental had with their tyre-
manufacturing processes?
(Hint: Sidewall extrusion process was not performing.)
2. How did the Six Sigma impact Mable Continental’s business performance?
(Hint: This resulted in big profits for the company which was approximately
USD 2,00,000.)
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1. Lean emphasises on continuous improvement and eliminating __________.
Exam Check
a. Errors
b. Waste
c. Flexibility
d. Safety
2. Which of the following is an important objective of lean management?
a. Decreasing inventory
b. Increasing the safety stock
c. Maximising resources
d. Maximising flow value to the customer
3. Mr. A has recently joined a lean organisation in its operations department.
In order to learn about the processes and work culture, his manager should
ideally advise him to __________. (Choose the most appropriate option.)
IT a. Visit the warehouse
b. Visit the HR area
c. Go on a Gemba walk
d. Go and meet all the supply chain stakeholders
4. What does ‘A’ in DMAIC stand for?
a. Achieve
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b. Analyse
c. Adjust
d. Acquire
5. With which of the following methodologies/tools can DMAIC be associated
most closely?
a. 5S
b. Kaizen
c. Six Sigma
d. Lean
6. Which of the following correctly describes the objective of the DMAIC
process?
a. Determine the quality system standards
b. Establish the specific limit for the product
c. Manufacture any form of product
d. Look for root cause of process and quality issues
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7. In which of the following scenarios would you use the DMAIC process?
a. Processes becoming problematic
b. Company receiving bad product review
c. Products quality lowered in the past days
d. All of these
8. Which of the following correctly describes the objectives of the measure
phase of DMAIC?
a. Find the root cause of the problem
b. Develop performance metrics
c. Develop solutions
d. Determine the customer requirements
9. What does ‘V’ in DMADV stand for?
a. Verify
b. Valid
c. Variable
d. Vigil
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10. Which of the following tools should be used to identify the areas of waste
elimination in a process?
a. 5S
b. Mistake proofing
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c. Value stream mapping
d. Root cause analysis
11. An organisation implements lean management to achieve __________
benefits.
a. Long-term
b. Short-term
c. Faster-speed
d. Mid-term
12. Which of the following organisations was the first to implement Lean Six
Sigma?
a. Toyota
b. Ford
c. Motorola
d. None of these
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13. In which stage of the DMAIC process is the Ishikawa diagram used?
a. Analyse
b. Measure
c. Define
d. Control
14. Brainstorming and selecting new and innovative concepts is part of which
phase in DMADV?
a. Verify
b. Measure
c. Analyse
d. Define
15. Which of the following action statements can be associated with DMADV?
a. Redesigning the problematic product or process
b. Mistake proofing
IT c. Solving quality problems
d. Defining quality system standards
16. __________ focusses on minimising the process variations and is used by
numerous organisations.
17. Lean management aims at creating value for customers by reducing
__________ activities and lead times.
18. The main purpose of the DMAIC process is to reduce or minimise the process
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variations which lead towards __________ and gaining required outcomes
from the processes.
19. The objective of DMAIC is to achieve sustained improvements along with
stabilisation and __________ of the processes.
20. Under DMADV, the occurrence of errors and defects in products, processes
and services is __________.
21. The DMADV method creates a __________ design that invariably prevents
problems from happening through quality processes.
22. The main objective of DMADV is to understand the requirements of the
customer. (True/False)
23. DMADV is used as a roadmap for implementing six sigma methodology and
solving the problems and improving the processes. (True/False)
24. Redesigning requires approval of the customer and management support.
(True/False)
25. At the design stage of DMADV, the conceptual and detailed designs are
created for the concerned process or product. (True/False)
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1. Mr. John and Mr. Krishna are business partners. Together, they own three
rubber processing factories. Factory 1 (F1) is the newest and is operating
smoothly. Factory 2 (F2) was started 10 years ago and its operations
department has reported that some processes are running delays. Factory
3 (F3) makes a special type of tyre but the sales data of the last three years
has shown that the demand and revenue have fallen consistently. John and
Krishna are anticipating use of one or more options as follows:
i. Implement DMAIC
ii. Implement DMADV
iii. Maintain status quo
iv. Implement LSS
After analysing all options, choose the correct option:
a. F1-iii; F2-i; F3-ii
b. F1-i; F2-ii; F3-iii
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c. F1-iii; F2-ii; F3-i
d. F1-iii; F2-ii; F3-ii
2. Consider the following factors and suggest which factor has the maximum
contribution in motivating the management for adopting Six Sigma?
i. Improved bottom line
ii. Improved market share
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iii. Reduced defects
iv. Increased customer focus
a. Only i
b. Only ii
c. i and iii
d. i and iv
3. Consider the following lists and choose an option.
List 1 List 2
i. Define stage of DMADV 1. Product development guidelines
ii. Measure stage of DMADV 2. Process capability
iii. Fourth stage of DMADV 3. High-level product design
a. i – 3; ii – 2; iii – 1
b. i – 1; ii – 3; iii – 2
c. i – 1; ii – 2; iii – 3
d. Options cannot be matched
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a. It is a tool that defines and creates processes, products or services.
b. It gives the process or product or service designers the liberty to use their
creativity and innovation to build the best possible design.
c. It is a process improvement tool.
d. In its measure phase, the expected process performance level is measured.
9.11 ANSWER KEY
Topic Q.No Answer

Goals of Lean Management 1. culture
2. True
IT Concept of DMAIC
Concept of DMADV
3.
4.
5.
process variations
True
robust design
6. False
Goals of DMAIC and DMADV 7. management support
8. True
Integration of Lean with DMAIC/ 9. process flow
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DMADV
10. False
Q. No. Answer
1. b. Waste
2. d. Maximising flow value to the customer
3. c. Go on a Gemba walk
4. b. Analyse
5. c. Six Sigma
6. d. Look for the root cause of process and quality issues
7. d. All of these
8. b. Develop performance metrics
9. a. Verify
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Q. No. Answer
10. c. Value stream mapping
11. a. Long-term
12. d. None of these
13. b. Measure
14. c. Analyse
15. a. Redesigning the problematic product or process
16. Six Sigma
17. Non-Value-Adding (NVA)
18. continuous improvements
19. optimisation
20. minimised
21. robust
22.
23.
24.
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False
False
True
25. True

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Q. No. Answer
1. a. F1 – iii; F2 – i; F3 – ii
2. a. Only i
3. c. i – 1; ii – 2; iii – 3
4. c. It is a process improvement tool.
@ SUGGESTED BOOKS
McCarty, T. (2005). The Six Sigma Black Belt Handbook. New York: McGraw-
Hill.
Morgan, J., & Brenig-Jones, M. (2016). Lean Six Sigma for Dummies. Chichester,
West Sussex, United Kingdom: Wiley Brand.
245
E-REFERENCES
De Mast, J., & Lokkerbol, J. (2012). An analysis of the Six Sigma DMAIC
method from the perspective of problem-solving. International Journal of
Production Economics, 139(2), 604-614.
(2019). Retrieved 29 August 2019, from https://www.sixsigmadaily.com/
what-is-dmadv/
(2019). Retrieved 29 August 2019, from https://www.sixsigmadaily.com/six-
sigma-basics-dmaic-vs-dmadv/
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CHAPTER
10
LEAN THINKING
Table of Contents
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Chapter Objectives
Introduction
Learning Outcomes
10.1 Lean Thinking: Origin and Concept
10.2 Five Principles of Lean Thinking
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10.2.1 Defining Value
10.2.2 Identifying and Mapping the Value Stream
10.2.3 Creating Flow
10.2.4 Establishing Pull-based Production
10.2.5 Pursuing Perfection
10.3 Summary
10.4 Key Words
10.5 Case Study
10.8 Answer Key
 Explain the origin and concept of lean thinking

 Describe the five principles of lean thinking which include defining value,
identifying and mapping the value stream, creating flow, establishing pull-based
production and pursuing perfection
I N T R O D U C T I O N
Read In the previous chapter, you studied about the lean management implementation
Pre-read Connect using DMAIC and DMADV processes.
Lean thinking is a proven paradigm under which organisations constantly strive

to go lean, eliminate waste and improve their processes. Lean thinking applies to
IT
product development and production. When an organisation starts thinking in a
lean manner, it can go lean.
In this chapter, you will study about the origin and concept of lean thinking. In
addition, the five core principles of lean thinking that are essential for implementing
lean will also be discussed.
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Lean Thinking
LEARNING OUTCOMES
Produce a detailed description of how the term ‘lean thinking’ came into
being
Exemplify the use of the five lean principles in real-life scenarios
10.1 LEAN THINKING: ORIGIN AND CONCEPT

Today, lean has become a well-known business philosophy and is used by
organisations of all sizes across the world. Earlier, it was seen as a collection of
N ote tools and techniques only. It is no longer restricted to the manufacturing sector
Lean philosophy and has spread to other industries, such as healthcare, software, construction
cannot be reduced and hospitality. Organisations that have been consistently implementing lean are
to a set of rules
or techniques or more innovative and profitable. Lean makes them sustainable in the long-term.
tools. It is a system In addition, lean also helps organisations gain a competitive advantage over their
of thinking and
behaviour and it
must be shared
throughout the
IT
competitors. Now, the industries have started embracing lean manufacturing
practices for increasing their production efficiency and gaining customer
satisfaction. Lean is used mostly in assembly-oriented organisations having
value stream. repetitive processes.
The lean approach emphasises continuously improving process performance

and systematically eliminating waste or non-value adding activities within its
manufacturing processes. Lean is a way to attain operational excellence. Lean effort
is made possible by involving employees, board-room members, stakeholders,
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suppliers, sponsors and customers. The lean approach requires an understanding
of value-adding activities and non-value adding activities in the process of creating
and delivering the product or services. According to Womack, lean principles
can be officially institutionalised in an organisation by incorporating appropriate
transformations in the corporate culture, practices, processes, and management
which go beyond the manufacturing floor.
Lean management integrates systematic management and engineering techniques,

methods and practices which focus on eliminating wastes and maximising the
flow of value-added activities in the production process according to customer
demands.
The origin of lean concepts goes back to the Henry Ford’s era when he pioneered
the mass production systems used to manufacture large quantities of standardised
products. Ford initiated mass manufacturing and as a result, fabrication and
assembly of the components could be completed within a few minutes. Due to
the success of mass production between 1908 and 1927, Ford Motor Company was
able to produce over 16 million Model-T cars. The US military adopted Ford’s
mass production system during World War II.
In the opening chapters of this book, you have already studied how Toyoda
Automatic Loom Works was established in 1926 by Sakichi Toyoda. Years later,
the company changed its name to Toyota when it started producing automobiles.
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Toyota could not have used mass production concept since the Japanese market
was too small. The requirements of the Japanese customers varied from smaller
cars to bigger and luxurious cars. The main focus of Ford’s mass-production was
on the quantity of production rather than customer requirements. Taiichi Ohno of
Toyota was asked to develop a new production system to produce the required
quantity of cars on demand bases. As a result, Toyota Production System (TPS)
was born. The cars produced using the TPS was high in quality, variety and could
be produced faster and at lower costs.
The TPS was based on two key concepts, namely Jidoka and Just in Time (JIT). The
concept of Jidoka was based on a principle that whenever there was a problem
in the production process, the machine or the equipment should stop working
to prevent the production of defective products till the floor-worker solves the
problem. It was based on the concept of automation with a human touch. A single
person could monitor and control many machines simultaneously. The JIT process
was based on the principle of continuous flow, where each process would only
procure, as and when required, and would produce only what is required by the
next process. JIT is a simple philosophy and its essence lies in the fact that the
organisation should produce goods based on requirements of what is required,
when it is required and the amount in which it is required. Using JIT and Jidoka,
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Toyota was able to eliminate the waste and produce high-quality goods at a rapid
pace and gain customer satisfaction.
Before we discuss the concept of lean thinking, it is relevant to lay a background

for it.
In 1991, James P. Womack, Daniel T. Jones and Daniel Roos wrote a book titled
The Machine That Changed the World based on their observations of the TPS and
various other manufacturing systems. This book was based in Massachusetts
Institute of Technology’s study related to the future of the automobile industry. The
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study was conducted over a period of five years and approximately USD 5 million
were spent on it. The term lean production was popularised because of this book.
The observations made by Womack, Jones and Roos were based on five principles
which include i. defining value, ii. mapping the value stream, iii. creating flow,
iv. using a pull system, and v. pursuing perfection. These five principles will be
discussed in detail in the next section. Womack and others believed that for the
correct use of lean in services, it was necessary to apply important principles such
as completely solve the customers’ problems by providing them what they want
where they want and when they want it.
In 1996, James P. Womack and Daniel T. Jones published another book titled
Lean Thinking: Banish Waste and Create Wealth in Your Corporation. The term ‘lean
thinking’ came into being due to this book. In both these books, the authors have
highlighted how brilliantly the Toyota Production System worked and they named
such types of manufacturing systems as ‘lean systems’. They differentiated lean
systems from mass manufacturing systems.
In the post-war era, the Japanese had to produce more using minimum resources,
i.e., they had to do more with less which became the underlying philosophy of
lean thinking. Lean thinking practices developed at Toyota (TPS) are not based on
any rules or on any corporate improvement mission. There is no one best way or
a defined model that can be used to implement lean thinking. In addition, there
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Lean Thinking
are no teachers or any implementation plans. In contrast, lean thinking can be

considered as a philosophy, which advocates empowering knowledge workers or
employees who can become independent goal seekers. Such employees develop
deeper problem-solving skills and critical thinking capabilities.
N ote
Lean production Earlier, the term ‘lean thinking’ was considered as a new school of thought in
combines the manufacturing with specific reference to the automobile sector. Manufacturing
advantages of systems have evolved from craft production to mass production to lean production.
craft and mass Today, lean thinking is applied in a wide range of manufacturing and service
production.
organisations.
The essence of lean thinking lies in shortening of the value chain. For instance,
Dell was one of the first few organisations, which shortened their value cycles
by eliciting individual customer requirements, customising the Dell product
accordingly and shipping it directly to the end-customer.
It is an established fact that the organisations that rework on their value chain find
ways to provide more value to their customers using fewer resources as compared to
their competitors. Such organisations are able to attain an absolute and undeniable
competitive advantage. Lean thinking supports that value should be provided to
customers by determining the value-creating processes with zero waste. A major
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task in implementing lean thinking is to optimise the flow of products and services
through the entire value stream that flows horizontally across the manufacturing
processes to the customers. Till now, there is no one specific definition of lean
thinking. Different researchers and authors have tried to put forward their version
and understanding of lean thinking.
Lean thinking can be defined as a way of thinking and conduct for an entire
organisation aimed at continuous improvement. Lean thinking helps the
organisations in transitioning from its traditional way of thinking and management
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towards lean management. This transition requires a lot of effort and is normally
a long-term approach for the business organisation.
Lean thinking advocates elimination of waste from the value streams in order
to create processes that require a lesser amount of capital, space, human effort
and time for producing products and services. As a result of lean manufacturing,
processes become less complicated and contain fewer defects. Lean organisations
are able to respond faster to the changing demands of the customer and improve
their quality and profitability. In addition, they also decrease costs and reduce
throughput times.
According to J. Gershenfeld, most of the leaders belonging to different sectors
consider lean as a central factor for achieving success. He also quoted the examples
of Dell and Toyota.
1. An organisation must identify and eliminate the ___________ activities

from its processes.
S elf
A ssessment 2. Using lean, organisations are able to improve on their quality of products
Q uestions and services and increase their faster throughput times. (True/False)
3. Ford initiated ________ and as a result, fabrication and assembly of the
components could be completed within a few minutes.
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4 Organisations which have been consistently implementing lean are more

innovative and profitable. (True/False)
Research over the Internet and present a brief synopsis of any research paper
A ctivit y 1 that has lean thinking as its main theme.
10.2 FIVE PRINCIPLES OF LEAN THINKING

Lean management works at reducing production time and costs and improving
quality. A lean organisation in comparison to a non-lean organisation can work
effectively at the same level of output by utilising lesser inputs, machinery,
materials, time, space, effort and cost.
There are some people who believe that because lean management cannot be
standardised, it cannot be repeated and replicated. But lean management can be
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implemented using the five underlying principles of lean thinking.
As defined by Womack and Jones in their book, The Machine That Changed the
World, these five principles are shown in Figure 1:
1. Define Value
2. Identify Value and Map the Value Stream

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3. Create Flow
4. Establish Pull
5. Pursue Perfection
Figure 1: Five Principles Underlying Lean Thinking
Let us now study about these five principles in the upcoming sections.
10.2.1 DEFINING VALUE

The process of lean implementation starts with the formal definition of the
customer value. What a customer expects in terms of value and the amount he is
willing to expend for the required product or service are defined clearly. There
are times when customers are unaware of what they want or what they need. In
such cases, research tools such as surveys, interviews, Web analytics, etc., can be
used to understand what the customer wants, likes and finds valuable. These tools
and techniques help in delineating customer requirements and the price they can
afford for the same.
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Lean Thinking
As a general rule, lean thinking suggests that the value is created by the producers.
However, value is defined by the end customer. Also, the definition of value is
meaningful only when it is expressed in terms of a specific product or service or
both. The value should meet customers’ needs at a specific point in time.
When defining value, the voice of the customer represents their needs and
requirements. Many organisations usually focus on their products and services
and neglect taking into consideration the needs and requirements of the
customers. An organisation should eliminate activities which do not add value
for future improvements. Once the non-value activities are eliminated, then, the
organisations can improve their performance. To achieve and sustain competitive
advantage, organisations need to be more customer-focused. This can be done by
identifying the value of the products and services which will help them in defining
the value stream, identifying wasteful activities and subsequently removing them
from the process. To identify wasteful activities, it is essential to differentiate
between the value-added and non-value-added activities. A value-added activity
can be defined as:
Activity for which the customer is willing to pay
Activity which is done right the first time

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Activity that helps the product move downstream and one step closer to its
completion
The three categories of activities with respect to customers are as follows:
Value-Added (VA) activity: An activity for which a customer is willing to
pay
Non-Value-Added (NVA) activity: Activities which are not required and do
not provide any value and can be eliminated
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Essential Non-Value Added (ENVA): The activities provide no value for the
customers but are required for certain processes
The general lean journey of an organisation is depicted in Figure 2 as follows:
STUDY HINT
Two key
components of
the first principle
‘define value’ are
defining value and
eliminating waste.
Figure 2: The Lean Journey

Source: http://www.hksq.org/HKSQ_LM_Fri_18_Jul_08.pdf
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10.2.2 IDENTIFYING AND MAPPING THE VALUE STREAM

According to the second lean principle, the entire value stream for each product
or product family should be identified and eliminated. Also, the value should
be identified and the value stream of the product or services should be mapped.
The value stream mapping helps in identifying the steps and activities that add
value to the customer. A customer does not pay for wasteful activities. All forms
of unessential waste should be totally eliminated from the system. This helps in
improving efficiency and bringing down the costs of producing goods.
According to Womack and Jones, there are three forms of actions that occur along
a value chain as follows:
Many steps would be found to create value.
Many steps would be found to create no value but are unavoidable keeping
in view the current technologies and production assets.
Many steps would be found to create no value and can be avoided altogether.
Value Stream Mapping (VSM) is used for displaying, analysing and improving the
production steps required to deliver a product to the end customer. It is a flowchart-
IT
based method that helps to review the flow of processes and information from the
start till the end when it is delivered to the customer. Value stream mapping helps
create a detailed visualisation of all steps required in the workflow. It helps to
show the flow of goods from the manufacturer to the customer. A value stream
map is created by the people involved in the process and is a team effort. VSM is
a step-by-step process for presenting the current state of a process or system in
the form of value stream map. Just like other flowcharts, it uses different symbols
to show different tasks and flow of information. VSM helps in identifying and
removing waste. The non-value-adding activities are mapped and removed. Some
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of the advantages of the VSM are as follows:
It helps in finding the root cause and the source of the wastage and removal
of wastage.
It improves communication, culture, behaviour and collaboration in VSM
process teams.
It improves customer satisfaction.
Some of the important activities of the value stream mapping (VSM) are as follows:
Selecting the product/product family to be mapped
Using the VSM symbols
Defining the process boundaries
Defining the process steps
Defining the information flows
Defining the process data
Mapping the multiple suppliers and customers
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Lean Thinking
10.2.3 CREATING FLOW

Once wastes are removed with the help of the VSM, the remaining process steps
flow smoothly without any delays and obstructions. To ensure that processes
move without any interruptions, it is important to create multi-functional units,
breaking down of work structure, reconfiguring the production steps, levelling-
out of the workload and more activities.
The first visible effect of converting from departments and batches to product
teams and flow is that the time required from the concept till launch, sale and
delivery to the customer falls dramatically. Creating flow in processes from the
time the order is received from the customer till the time end-product is delivered
to them is essential for ensuring smoothness of the process. Major obstacles in
creating flow include interruptions, delays and bottlenecks. It is necessary to
keep a track of the workflow for the processes to move smoothly. Creating flow
means that the product goes through the production process without stopping.
In continuous flow production, the cycle time equals the lead time because the
product does not have to wait in any queue. This helps in delivering value-added
goods to the customers. Creating flow helps in producing goods and moving from
one step of production to the other as continuously as possible with each step
IT
delivering what is needed. Creating a continuous and steady flow of processes
ensures that the best way to run the process from the start till the end is by using
minimum resources and time and by adding value-added steps to the process. The
factors that can help in creating a smooth flow of processes are as follows:
Map the process
Identify and list down the problems
Identify the wastes in the present process
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Map the ideal state of processes required for perfection
Develop an action plan for the actions needed
Use the performance metrics to track and monitor new processes
Make steady improvements
Creating a steady flow of production benefits an organisation by:
Reducing costs
Bringing down the inventory levels
Improving on-time delivery to customers
Delivering higher-quality goods
10.2.4 ESTABLISHING PULL-BASED PRODUCTION

Establishing a pull-based system means that only the product that a customer
wants should be designed and developed only when he/she wants it. This
practice of letting the end-customer pull a product from the value stream helps in
eliminating the wastes in the form of obsolete products, finished goods inventories
and tracking systems.
255
A pull-based system ensures that the inventory is limited and can be made available
in time for the smooth flow of work processes. Stocking up of inventory adds to
a lot of waste. The goal of the pull-based system is to manufacture the product
on time for just-in-time delivery. Pull-based systems are dependent on needs of
customers and therefore, are able to keep them satisfied.
The pull-based production is an important part of lean manufacturing which helps

to pull in the workflow when there is a demand for the product or service. A pull
system produces goods when there is a demand for them and not on the basis of
forecasts. In this production system, the goods can be produced with lesser lead
time and can be supplied at high speed.
The pull-based production eliminates wasteful activities from the production

process by optimising the resources and reducing overstocking. The pull theory
can be compared to an elevator. The elevator starts when the button is pushed
even if there is a single person. Hence, the pull strategy waits and responds to
customer demands. This form of production does not require any pre-production
but needs only limited inventory. The Kanban approach is used by the pull-based
production systems. The Pull theory helps organisations in the following ways:
Adapts faster to the changes in the work process
IT

Decreases wasteful resources
Uses the optimum capacity of the team
Delivers goods faster
Improves the flow of efficiency
Increases productivity
There are three basic types of pull production systems:
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Replenishment pull: A pull production system when the customer pulls
what he requires from the supermarket.
Sequential pull: A pull production system wherein the sequence of work is
maintained by controlling the time and quantity between operations. This
type of pull system requires minimal inventory.
Mixed pull system: A pull production system created when both the
replenishment and the sequential pull are used together.
10.2.5 PURSUING PERFECTION

An important goal of lean thinking is to strive for perfection in its processes.
It aims at achieving continuous process improvements where every employee
works towards perfection. The company culture should be open to adapting new
technologies and new methods for developing continuous improvements and
delivering better value to customers. Lean philosophy works at creating perfect
processes which can adapt to the changing needs of the customers. For pursuing
perfection, lean identifies the areas of improvement, defining the value-added
processes with no wastage.
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Lean Thinking
The five principles of lean work in a cyclical manner interlinked with each other
and are helpful in achieving the objectives of each principle. The tools normally
used for achieving perfection are kaizen events, total productive maintenance
(TPM), error proofing, etc.
5. __________ means that the product goes through the production process
without stopping.
S elf
A ssessment 6. VSM improves communication, culture, behaviour and collaboration in
Q uestions process teams. (True/False)
10.3 SUMMARY
Organisations which have been consistently implementing lean are more innovative
and profitable. Lean makes them sustainable in the long-term. In addition, lean
also helps the organisations gain a competitive advantage over its competitors.
Lean approach emphasises continuously improving process performance

and systematically eliminating waste or non-value adding activities within its
IT
manufacturing processes.
In 1991, James P. Womack, Daniel T. Jones and Daniel Roos wrote a book titled The
Machine That Changed the World based on their observations of the TPS and various
other manufacturing systems. The term lean production was popularised because
of this book. The observations made by Womack, Jones and Roos were based on
five principles which include: i. defining value, ii. mapping the value stream, iii.
creating flow, iv. using a pull system, and v. pursuing perfection. In 1996 James P.
Womack and Daniel T. Jones published another book titles Lean Thinking: Banish
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Waste and Create Wealth in Your Corporation. The term ‘lean thinking’ came into
being due to this book.
Lean thinking is applied in a wide range of manufacturing and service organisations.

The essence of lean thinking lies in shortening of the value chain. Lean thinking
advocates elimination of waste from the value streams in order to create processes
that require a lesser amount of capital, space, human effort and time for producing
products and services.
The process of lean implementation starts with a formal definition of customer value.
After this, the entire value stream for each product or product family should be
identified and eliminated. Value Stream Mapping (VSM) is used for displaying,
analysing and improving the production steps required to deliver a product to the
end customer. Creating flow in processes from the time the order is received from
the customer till the time end-product is delivered to them is essential for ensuring
smoothness of the process. A pull-based system ensures that the inventory is
limited and can be made available in time for the smooth flow of work processes.
An important goal of lean thinking is to strive for perfection in its processes. It
aims to achieve continuous process improvements where every employee works
towards perfection.
257
10.4 KEY WORDS

Lean thinking: A term used to describe the process of business decision
making in a lean manner
Jidoka: A lean concept that suggests when a problem occurs, the machine or
the equipment should stop working till the defect is removed
Just-in-Time: A lean principle of continuous flow where each process would
only produce what is required by the next process
Value Stream Mapping: A practice that helps in identifying and mapping
the value stream of the product
Pull-based System: A production system wherein the inventory is limited
and is made available in time production
10.5 CASE STUDY: NIKE’S LEAN SUCCESS

Every company aims to maximise its profits and the best way to do it is by cutting
costs. In present times, when prices and costs are very volatile, merely cutting cost
IT
does not suffice. Companies need to streamline their whole process, reduce waste
and improve quality. Lean is a simple and practical concept initially developed and
implemented in Japan. Lean manufacturing principles are a more refined version
of the earlier efficiency efforts and processes introduced by manufacturing giants
like Toyota and Ford. It basically involves designing, manufacturing, delivering
and supporting products more efficiently and at lower costs while systematically
identifying and eliminating wastes through the product lifecycle.
During the 1990s, Nike faced a number of problems with its manufacturing
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supplies. The problem was investigated and it was found to be quite complex.
Nike was dependent on contracted suppliers since they did not directly own
any factories. The suppliers were spread across SE Asia and the people that the
suppliers employed consisted majorly of people migrating from the rural farming
communities who had no experience in manufacturing processes. Since they were
facing stiff competition from rival firms, such as Reebok, Puma and Adidas to
make their supply chain better, they did not want to take any risks and decided to
implement lean manufacturing processes.
The success story of Nike was highlighted in the journals. According to Nike’s
FY 10-11 business performance report, it demonstrated tremendous results in
eliminating waste, time loss and material loss from its processes by adopting
lean manufacturing throughout its factories. According to the report, once lean
methods of manufacturing were brought in, the factories managed to cut defect
rates by 50%. Nike stated that the company improved on their delivery lead times
by an average of 40%. In addition, the productivity increased from 10% to 20%.
Nike has taken the initiative of supporting the contracted factories by encouraging
and providing them the resources and knowledge to adopt lean. Nike also
encouraged transition by providing coaching, training and technical help to
the workforce which has been hired by the factories and helped them become
specialised in their skills. They successfully implemented the baseline methods
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Lean Thinking
and techniques of lean methodologies, which helped them with the making of 11%
of equipment, 57% of apparel and 80% of footwear by the end of the year 2011.
Mark Parker, CEO and President at Nike, said in a statement, “Sustainability at Nike
means being laser-focussed on evolving our business model to deliver profitable growth
while leveraging the efficiencies of lean manufacturing, minimising our environmental
impact and using the tools available to us to bring about positive change across our entire
supply chain.”
Source: http://cmuscm.blogspot.com/2013/02/nike-strikes-gold-with-lean.html
QUESTIONS
1. How did Nike streamline its processes?
(Hint: Redesigning, initiating changes in processes, reducing waste,
improving quality.)
2. How did Nike take the initiative of encouraging lean in its factories across
the globe?
(Hint: Providing coaching, training, guiding with new technologies, skilled
IT
workforce and knowledge)

1. Which of the following is the main principle of lean thinking?
Exam Check
a. Maximise the resources
b. Flow value for the customer
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c. Increase inventory
d. Increase the safety stocks
2. Which of the following are the correct five principles of lean?
a. Value, value stream, flow, pull and perfection
b. Hejiunka, standard work, TPM, JIT and Kaizen
c. Takt time, Flow, Pull, Interval and Pitch
d. Takt time, Flow, Pull Schedule one point and Finished goods
3. Which of the following is considered as the most lethal waste?
a. Defects
b. Wrong processing
c. Overstocked inventory
d. Overproduction
4. Which of the following wastes can be controlled by regulating the flow,
reducing time and working according to customer demand?
a. Motion b. Wrong processing
c. Inventory d. Unused skills of the workforce
259
5. Which one of these terms is related to VSM for continuous improvement?

a. Takt time
b. Understanding customer value
c. Cycle time
d. Right processing
6. VSM helps in visualising _______.
a. Information flow b. Material flow
c. Lead time d. Cycle time
7. Which of the following acronyms can be used to identify the 8 wastes of
lean?
a. UPTIME
b. DOWNTIME
c. DOWNTOWN
d. UPTOWN
IT
8. Lean manufacturing can be defined as
a. Method for reducing labour cost
b. Efficiency in managing the processes
c. Set of techniques for improving the production system
d. Means of improving the responsiveness of the customer
9. Which of the following options can be associated with over-processing?
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a. Unlimited inventory
b. Non-value processing
c. Overproduction
d. Transport and handling
10. Who discovered lean technology at Toyota?
a. Genichi Taguchi
b. Shigeo Shingo
c. Taiichi Ohno
d. Kaoru Ishikawa
11. ______________ relates to the lean principle of ‘Just In Time’ (JIT).
a. Creating flow b. Improvement
c. Pull system d. Production
12. Which of the following options represents customer’s perspective of quality?
a. Product-based definition
b. Manufacturing-based definition
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Lean Thinking
c. User-based definition of quality

d. Production system-based definition
13. Poka Yoke is related to
a. JIT b. Six Sigma
c. Lean d. Foolproofing
14. Which of the following processes is not a part of the lean manufacturing
process?
a. Documenting policies
b. Specifying value
c. Aiming for perfection
d. Creating a flow
15. Which of the following information is not important for creating a value
stream map?
a. Cycle time
IT
b. Inventory level
c. Lead time
d. Team members
16. The organisations must systematically eliminate _____ or non-value-adding
activities within its manufacturing processes.
17. Lean thinking originated in the manufacturing premises of Japanese
automaker _______.
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18. __________________ is based on the principle of continuous flow wherein
each process would only produce what is required by the next process.
19. According to the second lean principle, the entire value stream for each
product or product family should be____________.
20. Lean management works at reducing ________ and costs and improving
quality.
21. A ________ is a pull production system where the customer pulls what he
requires from the supermarket.
22. Establishing a pull-based system means that only the product that a customer
wants should be designed and developed and only when he/she wants it.
(True/False)
23. The idea of pursuing perfection is providing the customers with the right
products with low value or benefits within the specified time and in the right
quantities. (True/False)
24. In VSM, the non-value adding activities are mapped and removed. (True/
False)
25. Once the ENVA activities are eliminated, organisations can improve their
performance. (True/False)
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1. Correctly match the following lists:
List 1 List 2
i. Create flow A. Value stream mapping
ii. Identify value B. Ensure that the processes move without any
interruptions
iii. Pursue perfection C. Achieve continuous process improvements
a. i – B; ii – A; iii – C
b. i – A; ii – B; iii – C
c. i – C; ii – A; iii – B
d. i – B; ii – C; iii – A
2. By which book was the term ‘lean production’ popularised?
a. The Machine That Changed the World
b. Lean Thinking: Banish Waste and Create Wealth in Your Corporation
IT c. Improving Production with Lean Thinking
d. Strategic Lean Thinking and Value Management for Gravel Roads
3. Big Bazaar uses which type of pull?
a. Replenishment b. Sequential
c. Mixed d. Continuous
4. Carefully observe the following value stream map:
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Source: https://19january2017snapshot.epa.gov/lean/lean-environment-toolkit-chapter-3_.html
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Lean Thinking
If the total materials used are 195 lbs, then the required materials are equal
to ________.
a. 110 lbs b. 120 lbs
c. 130 lbs d. 140 lbs
10.8 ANSWER KEY
Topic Q. No. Answer

Lean Thinking: Origin and Concept 1. non-value-adding
2. False
3. mass manufacturing
4. True
Five Principles of Lean Thinking 5. Creating flow
IT 6. True
Q. No. Answer
1. b. Flow value for the customer
2. a. Value, value stream, flow, pull and perfection
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3. d. Overproduction
4. c. Inventory
5. b. Understanding customer value
6. a. Information flow
7. b. DOWNTIME
8. c. Set of techniques for improving the production system
9. b. Non-value processing
10. c. Taiichi Ohno
11. c. Pull system
12. a. Product-based definition
13. d. Foolproofing
14. a. Documenting policies
15. d. Team members
16. waste
17. Toyota
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Q. No. Answer
18. Just-in-time
19. identified and eliminated
20. production time
21. replenishment pull
22. True
23. False
24. True
25. False
Q. No. Answer
1. a. i – B; ii – A; iii – C
2. a. The Machine That Changed the World
IT 3.
4.
a. Replenishment
a. 110 lbs
@ SUGGESTED BOOKS
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Santos, J., Wysk, R., & Torres, J. (2015). Improving Production with Lean
Thinking. Wiley.
Womack, J., & Jones, D. (2013). Lean Thinking. London: Simon & Schuster,
Limited.
E-REFERENCES
What is Lean?. (2019). Retrieved 31 August 2019, from https://www.lean.org/
WhatsLean/
What Is Value in Lean?. (2019). Retrieved 31 August 2019, from https://
kanbanize.com/lean-management/value-waste/what-is-value-lean/
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CHAPTER
11
THEORY OF CONSTRAINTS, LEAN AND
SIX SIGMA
Table of Contents
IT
Chapter Objectives
Introduction
Learning Outcomes
11.1 Meaning of Constraints
11.2 Theory of Constraints (TOC)
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11.2.1 Steps in the TOC
11.2.2 Increase in Profit through TOC
11.2.3 Lean Thinking Vs. TOC
11.3 Theory of Constraints and Achievement of Lean Effectiveness
11.4 Integrating Lean, Six Sigma and Theory of Constraints
11.5 Summary
11.6 Key Words
11.7 Case Study
11.10 Answer Key
 Explain the meaning of constraints

 Describe the concept of the Theory of Constraints (TOC)
 Discuss the steps involved in the TOC
 Examine the effect of using the TOC on increased profits
 Compare lean thinking and the TOC
 Discuss how the TOC helps in achieving lean effectiveness
 Explain the effects of integrating lean, six sigma and the TOC
IT INTRODUCTION
Read In the previous chapter, you learnt about lean thinking, its origin and concept.
Pre-read Connect In addition, you also studied about the five principles of lean thinking, the
various concepts of lean and Six Sigma. In this chapter, you will study about yet
another approach which aims to improve the performance of organisations. Lean
approach is adopted by organisations to eliminate waste. Six Sigma is used by
organisations to reduce process variations. The Theory of Constraints (TOC) is
an extremely simple but important approach according to which all systems have
certain constraints and removing these constraints in a logical manner improves
the system performance. The TOC is implemented by using a five-step process.
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In this chapter, you will study about the meaning of constraints, the TOC, and the
relationship between lean, Six Sigma and the TOC.
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Theory of Constraints, Lean and Six Sigma
LEARNING OUTCOMES
Report the benefits of using the Theory of Constraints in any organisation
Develop a plan for the simultaneous use of lean, Six Sigma and the TOC
in an organisation
11.1 MEANING OF CONSTRAINTS

Eli Goldratt introduced the concept of constraints in 1984 in his book titled, The
Goal. A constraint can be defined as a factor that limits the system from achieving
its objective or goal. A constraint restricts the amount of throughput which an
organisation can produce. Constraints prevent organisations from achieving their
goals and, hence, the profits. A constraint acts as a bottleneck which limits the
processes for the system and the organisation as a whole. For surviving in the
industry, it is necessary for the enterprise to effectively manage constraints.
IT
In manufacturing organisations, every phase or system has a constraint or
bottleneck. It is necessary to focus efforts on improving the constraints for a fast
and effective method for increasing the success rate of the company. In his book,
The Goal, Eli Goldratt stated that a constraint is the weakest link in the chain.
In other words, a constraint can also be defined as the weakest link that limits
a system’s capacity or efficiency or throughput rate or cost. In the words of Eli
Goldratt, a constraint is anything that limits a system from achieving higher
performance versus its goal.
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1. The constraint restricts the amount of __________ which the company
can produce.
S elf
A ssessment 2. In the manufacturing process, every phase or system can have a constraint
Q uestions and it is necessary to focus on efforts for managing the constraints for a
fast and effective method for increasing the success rate of the company.
(True/False)
11.2 THEORY OF CONSTRAINTS (TOC)

Manufacturing guru, Eli Goldratt developed the Theory of Constraints (TOC) and
published it for the first time in his book titled, The Goal. In this book, Goldratt
defines TOC as a Thinking Process that enables people to invent simple solutions to
seemingly complex problems.
The TOC is a methodology under which the most important limiting factor or
constraint, which hinders the achievement of a goal (profit maximisation, in
most cases), is identified and systematically improved till the time the constraint
no longer remains as the limiting factor. In manufacturing, a constraint is often
referred to as a bottleneck.
267
The TOC is a scientific methodology, which aims to identify and remove bottlenecks
and is used in fields, like project management, supply chain management,
N ote operations management, government services, financial services, etc.
The big idea
behind the TOC is Organisations can increase their profits by using the TOC by decreasing their
that every process operational expenses, bringing down the inventory levels and increasing their
has a constraint
throughput. In a manufacturing environment, the manufacturing system consists
(bottleneck) and
trying to eliminate of a number of interdependent processes working together towards organisational
or minimise goals. Constraints limit the strength of any process. By managing constraints, a
that constraint system can achieve the maximum throughput.
is the most
effective method Constraints in a system can be external or internal. External constraints occur
of improving when the system can produce more than the market demand. In such cases,
organisation’s
throughput and the the organisation should create demand for the product in the market. Internal
bottom line. constraints occur when goods produced are lesser than the market demand.
Therefore, the organisation should work at identifying and removing constraints
or identifying and reducing the impact of the constraints.
There can be multiple constraints in a system. There are various types of constraints
that can affect an organisation as follows:
IT

External or market constraints: These constraints are related to demand,
such as when there is not enough demand.
Logical constraints: These constraints occur when faulty thinking or
assumptions hinder the success of an organisation. For example, faulty
hiring and training may be the real problem.
Paradigm constraints: These constraints are based on beliefs that are held by
the members of an organisation. These are the beliefs or assumptions that let
an organisation develop and follow certain policies.
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People constraints: These constraints are caused due to reasons associated
with employees. For example, constraints related to skilled employees and
high manpower cost.
Physical constraints: These constraints include capacity (resource)
constraints and material constraints. These include the constraints related to
labour, machines, buildings, raw materials, work-in-progress, etc. Physical
constraints occur when there are not enough people, equipment, facilities or
materials.
Policy constraints: These include mindset constraints, measure constraints
and method constraints.
Process constraints: These constraints or bottlenecks can act as the weakest
link and lead to suboptimal production. Examples include inventory waiting
for production, work lags, etc.
An organisation can identify and deal with any bottleneck and resolve the issue if
it takes care of the following aspects:
Everyone involved with the process must agree that there is a problem.
A general census should be reached regarding the kind of solutions required
for the problem.
268
Everybody should agree to the solution for resolving the problem.

While executing the solution to the problem, any probable obstacles should
be taken care of.
Some of the most important advantages of implementing the TOC include:
Increased profits
Increased pace of improvements
Improved capacity levels
Reduced lead times
Reduced inventory levels
11.2.1 STEPS IN THE TOC

The TOC states that organisations can be viewed as a set of linked processes
that transform inputs into saleable outputs. According to the TOC, this series of
linked processes is viewed as a chain, which is considered to be only as strong
as its weakest link. Goldratt states that in most organisations, there are only a
few true constraints. All the constraints facing an organisation must be managed
IT
effectively because even if there is a single constraint, it will affect the operations
and performance of the business. Goldratt has also put forward a five-step process
that can be used to strengthen the weakest link of a process or for identifying and
eliminating constraints. This process is known as five focussing steps, as shown
in Figure 1:
1.
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Identify the
System Constraint
5.
2.
Prevent Inertia
Exploit
from becoming the
the Constraint
Constraint
3.
4.
Subordinate
Elevate
Everything to the
the Constraint
Constraint
Figure 1: Constraint Management using Five Focussing Steps of the TOC
269
Let us now discuss the five focusing steps:

1. Identify the system constraint: For increasing the throughput of the system,
the first step is to identify the constraint. It is necessary to reduce or remove
the bottleneck that is obstructing the goal achievement of the organisation.
Organisations very often fail to identify the constraints which lead to further
problems in the system. Once constraints are successfully identified, then the
application of the theory of constraints becomes much easier in the process.
2. Exploit the constraint: Once the constraint is identified, then one should
analyse the situation and decide what needs to be done with the constraints
and how to increase productivity with the existing capacity restrictions.
Since the constraint is the weakest link, it is enough to limit the system and
achieve the objectives. For increasing the throughput, it is necessary to use
the constraints effectively.
3. Subordinate everything else to the constraint: It is necessary to use the
resources for the utilisation of the constraint since it is the slowest or most
limiting aspect of the system. It is important for non-constraints to provide
only enough resources that can be fully utilised by constraints. Subordination
is required so that constraints do not run out of resources. All decisions related
IT to non-constraints must be subordinated according to constraints’ needs.
Non-subordinates should optimise for the constraint/system performance as
against their own individual performances.
4. Elevate the constraint: Once constraints have been thoroughly identified
and the capacity is fully optimised, it is necessary to increase the capacity
so that the productivity and throughput of the system can be maximised.
The capacity can be increased by purchasing new tools and equipment and
increasing the workforce.
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5. Inertia from becoming the constraint: Once a constraint has been identified
and elevated, it means that the problem has been resolved. Here, elevating
means increasing the capacity of the constraint. In such a case, when the
weakest link/constraint gets strengthened, some other constraints emerge in
the system. Therefore, to further increase the throughput, it is necessary to
repeat the whole process again.
It must be noted that five focussing steps is a cyclical process and helps in the on-
going improvement of the systems.
11.2.2 INCREASE IN PROFIT THROUGH TOC

Profits can be increased by effectively managing the constraints of the organisation.
Every business organisation works on limited resources and can serve a particular
level of demand only. The constraints in the manufacturing process limit the
demand for goods. It is necessary to reduce the impact of the bottlenecks over the
manufacturing processes using the TOC.
It is necessary to select the right product mix that contributes to profits. The TOC
views the organisation as a system that is interdependent and interlinked in its
processes instead of a collection of processes or methods which are independent.
270
According to Dr. Eli Goldratt, the performance of an organisation is dependent

upon constraints, such as shortage of resources, the capacity of production, and size
of the market or the ability to generate new orders. The TOC works on managing
constraints and bringing improvement in the processes and, hence, maximising
the profits. According to the TOC, an organisation can control and measure its
profits by keeping a tab on three variables as follows:
Inventory: An organisation spends huge sums of money on inventory and
the organisation can make money only after it sells the finished inventory.
Operational expenses: The money that is spent on operations which convert
the inventory into finished goods.
Throughput: Maximum amount of goods or products that can be produced
by the organisation.
These measurements along with the five steps of the TOC help in problem-solving
and finding the root causes of the problem. The main objective of using the TOC
is to increase the throughput and decrease the operating cost and inventory. For
increasing the production, it is necessary to use the TOC as it offers techniques for
rapid improvements. The TOC focusses on improving the present constraint so
that it does not restrict the throughput until the focus shifts to other constraints.
11.2.3
IT
LEAN THINKING VS. TOC
The TOC and lean thinking have common goals of achieving continuous
improvement, increased productivity and increased profits. Both of these
emphasise on the quality of products and the value defined by the customer.
Both seek to minimise the inventory by ensuring continuous stream of inventory
and supporting production in small batches. They emphasise the use of tools
and methods for successful deployment and require skilled workforce for their
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manufacturing processes.
Both lean and the TOC approach their problems in a different manner and are
focussed on profit maximisation. The lean philosophy focuses on decreasing the
costs and variability, whereas the TOC focusses on increasing the throughput.
The lean initiative helps to streamline the production process using control
techniques such as pulling the market demand. It also makes the production
process faster and improves the system performance. The TOC focusses on a
single constraint, which needs to be improved for synchronising the processes
as per market demand and promoting the release of material into the system for
increasing the profit of the company. In contrast, using lean tools, an organisation
can work on multiple constraints or problems.
The TOC prefers to maintain a buffer inventory for guarding against variations in
upstream processes and protecting the throughput.
The similarities between lean thinking and the TOC are as follows:
Both are total system methodologies.
Both focus on continuous or ongoing improvement.
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Both aim at achieving higher profits.

In both methodologies, the value is defined by the customer.
For both, the value stream of supply chain goes beyond the manufacturing
process.
Both emphasise on quality.
Both emphasise on production in small batches.
Both advocate continuous flow.
Both advocate the pull-based market demand.
Both advocate releasing the hidden capacity.
Both stress the need for minimising inventory levels.
Both emphasise on workforce participation.
Due to their similarities, lean thinking and the TOC can be used together
synergistically for bringing benefits to the organisation. Lean thinking is a powerful
method that can be applied to processes for breaking constraints and improving
the performance of the system. Despite their similarities, there are certain key
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differences between lean thinking and the TOC as shown in Table 1:
Table 1: Key Differences between Lean and TOC
Lean Thinking Theory of Constraints

Goal Add value for the customers and Increase the throughput or
increase the profits maximum achievable production
and increase the profits
Measuring zz Value-added measures zz Throughput
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variables zz Costs zz Operating expenses
zz Lead time zz Inventory
Implementing Eliminate the waste and add value Strengthen the constraint or the
changes considering the system as a whole weakest link in the system
N ote Methods for Five steps which are used globally Five steps to remove constraint/
According to John
implementing are: implement the TOC are:
L. Werling, the TOC the change 1. Identify value 1. Identify the constraint
is not just a system
2. Map the value stream 2. Exploit the constraint
of eliminating
constraints 3. Create the flow 3. Subordinate everything to the
(bottlenecks) but
4. Establish pull constraint
more a system
of managing 5. Seek perfection 4. Elevate the constraint
constraints. A 5. Prevent inertia from becoming
company that is in the constraint
control of its own
destiny can use The TOC, if used along with lean, can benefit the entire organisation. When the
its constraints like
a valve to control
TOC and lean are used together, the performance measures that support lean
and continually implementation are used. For instance, the traditional metrics, such as asset
promote the flow of utilisation and burden absorption, are replaced by throughput, inventory and
value. operating expenses.
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3. In manufacturing, a constraint is often referred to as a __________.

S elf 4. The lean initiative helps streamline the production process using control
A ssessment techniques, such as the push market demand. (True/False)
Q uestions
11.3 THEORY OF CONSTRAINTS AND ACHIEVEMENT OF LEAN EFFECTIVENESS

As discussed, both lean and the TOC are approaches for process improvements.
Both these are capable of making the organisation agile having a strong focus on
customers. The manner in which these approaches are implemented is different.
However, both these approaches are highly complementary.
The TOC, a theory developed for constraint management helps the organisation
understand its production environment thoroughly. The TOC ensures that all the
employee activities must be conducted to meet customer demand and all activities
assure uninterrupted continuous order flow. Lean focusses on removing waste
from the manufacturing processes and lowering the manufacturing costs. On the
other hand, the TOC focusses on identifying and removing constraints. When the
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constraints that limit the throughput are removed, the throughput and amount of
goods produced increase.
Lean helps an organisation in value stream mapping of the production flow and in
taking stock of the actual floor situation by Gemba walk.
Lean supports the idea of motivating and empowering employees. Lean efficiency
can be developed by using the TOC by exploiting the constraints along with
brainstorming for ideas and implementing incremental changes.
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Both the TOC and lean thinking aim at reducing costs and increasing their profits.
Usually, the profit is calculated by the following formula:
Profit = Selling Price – Cost
Even though Goldratt attempted to use the TOC for improving the throughput
and not for cost reduction, the ultimate impact of the TOC is increased profits as
a result of decrease in costs. In the TOC, the throughput equation is written as
follows:
Throughput = Rate at which the organisation creates money by increasing

its sales
Lean thinking is centred around the notion of the customer-defined value and cost
reduction. Under lean, all the steps in the systems/processes that do not add value
for the customer are eliminated. The five steps of lean implementation include
specifying value from the perspective of the customer, identifying the value
streams, creating flow, establishing pull and pursuing perfection. On the other
hand, the five steps of the TOC implementation include identifying the constraints,
exploiting the constraints, subordinating everything to the constraints, elevating
the constraints and preventing inertia from becoming the constraints.
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The TOC methods can be integrated with lean implementation by fitting them
between steps 2 and 3 of lean implementation.
With respect to compatibility between lean thinking and the TOC, Eli Goldratt
stated that TOC tells you where to look and what to change, while lean tells you how to
change; both TOC & lean provide insight about how to cause the change.
5. Lean helps an organisation in __________ of the production flow.

S elf 6. Lean thinking is centred around the notion of supplier-defined value
A ssessment and cost reduction. (True/False)
Q uestions
11.4 INTEGRATING LEAN, SIX SIGMA AND THEORY OF CONSTRAINTS

The increase in global competitiveness has compelled business organisations
across the world to improve their productivity, quality and profits. Even though
N ote there are many ways to bring improvements, many organisations have invested
When the TOC, heavily in at least one of the three most effective methods of improvement, viz.,
Lean and Six Sigma
are used together,
it is called TLS.
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the TOC, Lean or Six Sigma. Organisation realise that all three approaches have
their own advantages and limitations.
The TOC, Six Sigma and lean are methods of managing business processes.
The goal of Six Sigma is on decreasing the variability of processes and product.
Lean focusses on eliminating wastes from the processes and bringing down the
time period and cost. The TOC focusses on eliminating system constraints and
increasing profits of the organisation.
Six Sigma reduces variations by using scientific and quantitative techniques. Lean
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methods help to optimise the process flow and eliminate wastes by reducing the
inventory and the unnecessary processes. Six Sigma helps to remove defects and
variations with an increase in the reliability of the processes. The TOC emphasises
on improving and managing system constraints. The integration of lean and Six
Sigma help the organisation achieve quality and speed.
All the three approaches, namely lean, Six Sigma and the TOC have their main
objective as increasing profits; however, their immediate goals of accomplishing
it are different. Six Sigma aims to meet customers’ expectations, lean aims to add
value for the customer and the TOC aims to eliminate constraints by making use
N ote of its five focusing steps and achieving greater throughput.
Michael Clingan
An integration of these three approaches means identifying the problems and
stated, ”If I use
Six Sigma, I can constraints of the organisation and finding the root cause of the problems to solve
show cost or them. It is not easy to determine the perfect methodology for the organisation. The
variation and that focus of TOC is usually on a single constraint and it is not possible to improve all
looks really good. the processes of the organisation at the same time. This hampers the process of
TOC is more about
meeting customer’s requirements for the product or the service at low cost. In such
impacting overall
organisational cases, Six Sigma can be used for increasing the throughput and lean philosophy
performance and can be used for removing the wastes associated with the process.
sometimes that
takes a little longer Lean and Six Sigma contribute in having a balanced system. Imbalance is created
to become visible.” due to constraints. Here, the TOC helps in identifying and resolving the constraints
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leading to increase in the throughput and, ultimately, leading to profitability of

the organisation.
N ote
Prepare a short Selecting an improvement methodology and sustaining it for a long period
case study on the depends on the organisation. The needs and reason for acceptance of improvement
usefulness of the methodology can be understood from the following points:
TOC.
Six Sigma is used by organisations which emphasise on data collection and
analysis, and which value analytical studies.
Lean principle is used by organisations which emphasise implementing
changes and reducing the time and costs.
The TOC is used by organisations which value a system’s approach.
7. Even though there are many ways to bring improvements, many

organisations have invested heavily in at least one of the three most
S elf effective methods of improvement, viz., the TOC, Lean or __________.
A ssessment
Q uestions 8. Imbalance in process is created due to constraints. (True/False)
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11.5 SUMMARY
Eli Goldratt introduced the concept of constraints in 1984 in his book, The Goal.
A constraint can be defined as a factor that limits the system from achieving its
objective or goal. For surviving in the industry, it is necessary for the enterprise
to effectively manage constraints. In his book titled, The Goal, Eli Goldratt, stated
that a constraint is the weakest link in the chain. In other words, a constraint can
also be defined as the weakest link that limits a system’s capacity or efficiency or
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throughput rate or cost.
The TOC is a methodology under which the most important limiting factor or
constraint which hinders the achievement of a goal (profit maximisation in most
cases) is identified and systematically improved till the time the constraint no
longer remains as the limiting factor.
There can be multiple constraints in a system. There are various types of constraints,
such as internal constraints and external constraints.
In most organisations, there are only a few true constraints. Goldratt has also
put forward a five-step process that can be used for identifying and eliminating
constraints. This process is known as Five Focussing Steps which include:
1. Identify the System Constraint
2. Exploit the Constraint
3. Subordinate Everything to the Constraint
4. Elevate the Constraint
5. Prevent Inertia from becoming the Constraint
The constraints in the manufacturing process limit the demand for goods. It is
necessary to reduce the impact of the bottlenecks over the manufacturing processes
using the TOC.
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According to the TOC, an organisation can control and measure its profits by
keeping a tab on three variables, namely throughput, operational expenses and
inventory. The TOC focusses on improving the present constraint so that it does
not restrict the throughput until the focus shifts to other constraints.
Due to their similarities, lean thinking and the TOC can be used together
synergistically for bringing benefits to the organisation. Lean thinking is a
powerful method that can be applied to the processes for breaking constraints and
improving the performance of the system.
Both lean and the TOC are approaches for process improvements, but the manner
in which these approaches are implemented are different. Both these approaches
are highly complementary.
Even though there are many ways to bring improvements, many organisations
have invested heavily in at least one of the three most effective methods of
improvement, viz., the TOC, Lean or Six Sigma. All the three approaches, namely
lean, Six Sigma and the TOC have their main objective as increasing profits;
however, their immediate goals of accomplishing it are different.
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11.6 KEY WORDS
Constraint: A factor that limits the system performance and hinders the
achievement of its objective or goal
Inventory: The sum total of the stock of raw materials, semi-processed
materials and finished goods
Operational expenses: The money spent on operations required to convert
the raw materials inventory into finished goods inventory.
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Throughput: The quantity of goods or products being produced by the
company for creating their profits through sales
11.7 CASE STUDY: APPLYING THEORY OF CONSTRAINTS FOR BAJAJ

ELECTRICALS
Over the last 75 years, Bajaj Electricals Ltd. has been in the business of luminaries,
lighting and electrical home appliances. It has steadily and successfully moved
into turnkey projects. The project of illumination and high mast lighting system
involved supplying lighting solutions to a broad number of domains such as
sports stadiums, airports, port trusts, monuments, shipyards, etc. Bajaj’s projects
provide connecting power transmission grids across India for connecting power
generating plants or substations and the power distribution projects take care of
the rural electrification.
Vector Consulting Group is an important consulting firm which specialises in the

Theory of Constraints (TOC) in India. They have entered into a partnership with
Bajaj Electricals Limited (REL) for a multi-year engagement. Vector Consulting
Group will help Bajaj in implementing and changing its supply chain using the
TOC principles.
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Ravneet Kalra, the Director of Vector Consulting Group gave his views on this
initiative of partnering with Bajaj Electricals. He was of the opinion that the
particular partnership will help Bajaj and the results of this project will help all
the suppliers and channel partners of Bajaj Electricals. It will benefit them by
improving on their inventory turns. Bajaj Electricals would benefit by penetrating
the markets with their total range of products and reduced levels of inventory.
R. Ramakrishnan, Executive Director, Bajaj Electricals Ltd. stated that normally the
trade management methods along with the supply chain and vendor management
techniques are determined by the win and lose principles. However, using the
TOC principles would benefit them in working on a win-win partnership where
everyone including partners, trade partners, customers, vendors and Bajaj
Electricals would gain tremendously. Their objective would be to reduce stocks,
improve fill rates, improve ROI of the dealers and vendors, reduce inventories and
improve the revenues and profits of the company significantly.
Bajaj intends to use the TOC to manage supply chain starting from the vendors
to the channel distribution. Implementing TOC at Bajaj Electricals Ltd. will have
a huge impact on all business units of Bajaj that are focused on customers. These
units include appliances, fans, lighting and Morphy Richards.
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Source: https://www.bajajelectricals.com/media/2837/bajaj-electricals-partners-with-vector-consulting-
group-to-revamp-its-supply-chain-2011.pdf
QUESTIONS
1. What prompted Bajaj Electricals to partner with Vector Consulting Group?
(Hint: Supply chain problems)
2. How did the theory of constraints impact Bajaj?
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(Hint: Market penetration, improvement in the supply chain management.)

1. Which of the following famous personalities introduced the Theory of
Exam Check Constraints?
a. Taiichi Ohno
b. Eli Goldratt
c. Michael Clingan
d. James P. Womack
2. How many steps must be followed for implementing the Theory of
Constraints?
a. 4
b. 6
c. 5
d. 3
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3. Which of the following is the correct description of a bottleneck?

a. A new resource
b. A resource that is kept at the centre of the workflow
c. Resource which is not needed
d. Resource which is less than or equal to the needs
4. Which of the following is not a valid metric under the Theory of Constraints?
a. Inventory
b. Total cost
c. Operating expense
d. Throughput
5. According to the Theory of Constraints, the rate of non-bottleneck operations
depends upon __________.
a. Product manager
b. Bottleneck operation
c. Downstream operation
IT d. Upstream operation
6. The big idea behind the Theory of Constraints is to increase the throughput
by __________.
a. Balancing the workflow
b. Increasing the finances
c. Keeping a stock of inventory
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d. Balancing the production line
7. Under the Theory of Constraints, the throughput can be defined as the
a. Money allotted for production
b. Profits in the system
c. Money flowing in the system
d. Money flowing out of the system
8. When is the non-constraint utilised in the Theory of Constraints?
a. When the production line is working at its full capacity
b. When the production line is balanced
c. When the production line is working at half of its capacity
d. When the production line is producing the throughput
9. Under the Theory of Constraints, balancing the workflow means _________.
a. On-time production
b. Producing goods at a pace set by the constraint
c. Letting the processes set their pace
d. Balancing the system processes
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10. What is the purpose of using the Theory of Constraints?

a. Making profits now and in the future
b. Taking care of the constraints
c. Increasing the throughput
d. All of these
11. The Theory of Constraints is implemented using five steps. The fourth step
is:
a. Exploiting the constraint
b. Sub-ordinating everything to the constraint
c. Elevating the constraint
d. Preventing inertia from becoming the constraint
12. Under the Theory of Constraints, when the inventory levels are decreased
without affecting the throughput, it results in __________.
a. Decrease in profit
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b. Increase in profit
c. Increase in production
d. Increase in return on investment
13. Which of the following statements is true with respect to lean?
a. Focusses on statistical techniques
b. Implemented over a long period
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c. Focusses on eliminating waste
d. It is a new body of knowledge
14. Which of the following statements correctly define lean manufacturing?
a. Producing a large variety of goods
b. Using the latest technology or equipment to increase output
c. Holding low stock levels
d. Producing lesser goods
15. Which of the following cannot be a constraint?
a. Machine
b. Belief
c. Policy
d. Process
16. For surviving in the industry, it is necessary for an enterprise to effectively
manage the __________.
17. The manufacturing system consists of a number of __________ working
together towards the organisational goals.
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18. Once the constraints are successfully identified, then the application of the
________ becomes much easier.
19. The constraints in the manufacturing process limit the ______ for goods.
20. Lean helps an organisation in value stream mapping of the production flow
and in taking stock of the actual floor situation by _________.
21. __________ reduces variations by using scientific and quantitative techniques.
22. Physical constraints include capacity (resource) constraints and material
constraints. (True/False)
23. In manufacturing organisations, every phase or system has a constraint or
bottleneck. (True/False)
24. A single constraint cannot affect the operations and performance of the
business. (True/False)
25. Lean thinking and the TOC can be used together synergistically for bringing
benefits to the organisation. (True/False)

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1. An organisation’s executive stated that “we must work for at least 48 hours
per week.” This statement is an example of _____________.
a. External constraint b. Logical constraint
c. Paradigm constraint d. Process constraint
2. Which of the following statements is untrue with respect to lean and the
Theory of Constraints?
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a. Both emphasise on quality.
b. Both use lead time metric.
c. Both advocate continuous flow.
d. Both emphasise production in small batches.
3. In the acronym TLS, T stands for __________.
a. Time b. Takt Time
c. TOC d. Theory
4. Match the keywords given in List 2 with the Continuous Improvement
approaches mentioned in List 1:
List 1 List 2
A. TOC i. Stabilise
B. Lean ii. Simplify
C. Six Sigma iii. Synchronise production and
demand
a. A-iii; B-ii; C-i b. A-ii; B-iii; C-i
c. A-iii; B-i; C-ii d. A-i; B-ii; C-iii
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11.10 ANSWER KEY

Topic Q. No. Answer
Meaning of Constraints 1. throughput
2. True
Theory of Constraints 3. bottleneck
4. False
Theory of Constraints and 5. Value Stream Mapping
Achievement of Lean Efficiency
6. False
Integrating Lean, Six Sigma and 7. Six Sigma
Theory of Constraints
IT 8. True

Q. No. Answer
1. b. Eli Goldratt
2. c. 5
3. d. Resource which is less than or equal to the needs
4. b. Total cost
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5. b. Bottleneck operation
6. a. Balancing the workflow
7. c. Money flowing in the system
8. d. When the production line is producing the throughput
9. b. Producing goods at a pace set by the constraint
10. d. All of these
11. c. Elevating the constraint
12. d. Increase in return on investment
13. c. Focusses on eliminating waste
14. c. Holding low stock levels
15. d. Process
16. constraints
17. interdependent processes
18. Theory of Constraints
19. demand
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Q. No. Answer
20. Gemba walk
21. Six Sigma
22. True
23. True
24. False
25. True

Q. No. Answer
1. c. Paradigm constraint
2. b. Both use lead time metric
3. c. TOC
4. a. A-iii; B-ii; C-i
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@ SUGGESTED BOOKS
Scheinkopf, L. (1999). Thinking for a Change. Boca Raton, Fla.: St Lucie Press.
Chakrabarti, A. Research into Design for a Connected World.
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E-REFERENCES
Watson, K., Blackstone, J., & Gardiner, S. (2006). The evolution of a
management philosophy: The theory of constraints. Journal Of Operations
Management, 25(2), 387-402. doi: 10.1016/j.jom.2006.04.004
(2019). [Ebook]. Retrieved from http://debis.deu.edu.tr/userweb//arslan.
ornek/dosyalar/Theory_of_Constraints.pdf
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CHAPTER
12
LEAN ASSESSMENT
Table of Contents
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Chapter Objectives
Introduction
Learning Outcomes
12.1 Lean Assessment
12.2 Lean Assessment Tools
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12.2.1 Lean Enterprise Self Assessment Tool (LESAT)
12.2.2 Why to do Lean Assessment?
12.2.3 Who Conducts Lean Assessment?
12.3 Process of Lean Assessment
12.3.1 Scoring
12.3.2 Evaluation
12.3.3 Planning and Execution
12.4 Summary
12.5 Key Words
12.6 Case Study
12.9 Answer Key
Table of Contents
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Lean Assessment
 Describe the meaning of lean assessment

 Explain the role played by lean assessment tools, such as LESAT
 Describe the lean assessment process along with its three stages
INTRODUCTION
In the previous chapter, you studied about the concept of constraints and the
Theory of Constraints (TOC). In addition, you also studied about the effects of
integrating lean, Six Sigma and the TOC.
You have already studied about various aspects of lean, its implementation, tools,
concepts and principles. An organisation has the liberty to implement lean in its
IT
processes and systems and use any combination of lean concepts that they deem
right. However, after some time, when it has successfully implemented lean, the
organisation would require assessing whether or not its lean efforts are bearing
fruits or not. This assessment called lean assessment or lean office assessment is
conducted by using certain assessment tools. One of the most widely used tools
is the Lean Enterprise Self Assessment Tool (LESAT). This tool works by clearly
defining 54 lean practices and giving a score for each such practice. The overall lean
score is calculated by summing the individual lean practice scores and dividing
this sum by the number of lean practices. The overall lean assessment process is
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divided into three stages, namely scoring, evaluation and planning and execution.
You will study about the details of these stages in the relevant sections where these
topics are placed.
In this chapter, you will study about various aspects of lean assessment including
its meaning, requirement, process and some of the most frequently used tools for
lean assessment.
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LEARNING OUTCOMES
Propose that lean organisations should carry out lean assessment in order
to improve their lean initiatives
Justify the use of a certain type of lean assessment tool
Facilitate the process of lean assessment
12.1 LEAN ASSESSMENT

In lean management studies, you must have come across terms, such as waste,
process improvement and continuous improvement quite frequently. Any
organisation, system, process or function can be improved by introducing
appropriate changes.
Prior to discussion of lean assessment, you must first understand the meaning and
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importance of assessment. Assessment can be defined as a practice of collecting
relevant data and evaluating, measuring and analysing it using a wide variety
of tools and techniques in order to generate an idea about how well things are
moving as compared to what was initially planned.
Assessment is done with respect to a particular subject (subject matter) only. For
example, students’ learning of a subject is usually assessed by undertaking tests
and examinations. Similarly, the taxes paid or not paid by people for an assessment
year are assessed by tax department using specific methods. Financial assessment
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of organisations generally includes preparation of balance sheet, profit and loss
account and cash flow statements. An evaluation of these statements can reveal
how an organisation is faring financially.
Assessment can be done for individuals, groups or organisations. Assessment

provides critical information regarding the performance level of the individual or
organisation being assessed. Assessments also help reveal problems and defects,
which can be resolved later on. Assessment can be carried out in a number of ways
and helps in improving systems and processes. Before pursuing an assessment
activity, information must be collected with respect to the following points:
Purpose of assessment
Budget and time required for assessment
Total approach towards the assessment
Communicating information to concerned people
The assessment can be done as an ongoing activity or on a continuous basis.
An organisation has to decide the kind of assessment it requires. Assessments
can be conducted using self-assessment methods or by using a comprehensive
audit. Organisations may conduct either qualitative or quantitative assessments.
Qualitative assessment is focussed on the basis of perceptions of people and
286
Lean Assessment
follows a naturalistic approach to its subject matter. Quantitative assessment is

done using numbers, measurements, experimental design and statistical analysis.
For surviving in the increasingly competitive market, organisations tend to use

improvement methodologies, such as lean, Six Sigma and TOC. Organisations
that adopt and follow lean philosophy are prompted to assess whether they have
benefitted from implementing lean and the level to which they have benefitted.
For this purpose, they conduct lean assessments under which the effects of
implementing lean are documented. Lean assessment approaches are used for
evaluating the level of leanness of an organisation. The information revealed
by lean assessment can be used in making decisions related to benchmarking,
continuous improvement, competitor analysis, etc. Usually, the lean assessment is
done by taking a tour of the lean production plant and by using techniques, such
as rating scales and questionnaires.
Ideally, a lean plant is rated with respect to the following:

Commitment to quality: A lean plant should give due attention to quality
and remove wastes.
Condition and maintenance of equipment and tools: A lean environment
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means that all the equipment and machinery are well-maintained. Also,
the people who work on these equipment should be involved in decisions
related to tools and equipment.
Customer satisfaction: Attitude of the production line workers with respect
to internal and external customers reveals information about the levels of
customer satisfaction.
Levels of inventory and work in process: In a lean environment, the
inventory should be sourced on a JIT basis.
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Management of complexity and variability: An assessment of how the
workers handle complexity and how they use common parts and fail-safe
devices represents how well lean techniques help in managing complexity.
Safety, environment, cleanliness and order: It is expected that lean plants
should be clean, safe and orderly.
Scheduling system: Since lean plants are based on the demand-pull system,
the speed and output of the production line should be dependent upon
demand.
Supply chain integration: Lean organisations procure on JIT basis. It requires
that the suppliers should be very well integrated with an organisation’s
lean system. Lean procurement means that there should be a minimum of
container labels and paperwork.
Teamwork and motivation: A lean environment should promote teamwork
and employee involvement.
Use of space and movement of materials: In a lean environment, the available
space is used economically and materials movement is done economically.
Visual management system: Kanban is an important part of lean
implementation. Visual boards help employees in finding locations, tools and
tasks. In addition, Kanban boards can also be used to record productivity,
quality and maintenance levels.
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A sample questionnaire that can be used for lean assessment of a plant is shown
in Figure 1:
Rapid Plant Assessment Questionnaire – 20 Yes or No Questions

1. Are visitors welcomed and given information about the plant, workforce, customers, and
products?
2. Are ratings for customer satisfaction and product quality displayed?
3. Is the facility safe, clean, orderly, and well lit? Is the air quality good, and are noise levels
low?
4. Does a visual labeling system identify and locate inventory, tools, processes, and flow?
5. Does everything have its own place, and is everything stored in its place?
6. Are up-to-date operational goals and performance measures for those goals prominently
posted?
7. Are production materials brought to and stored at line side rather than in separate inventory
storage areas?
8. Are work instructions and product quality specifications visible at all work areas?
9. Are updated charts on productivity, quality specifications visible at all teams?
10. Can the current state of the operation be viewed from a central control room, on a status
board, or on a computer display?
11. Are production lines scheduled off a single pacing process, with appropriate inventory
levels at each stage?
12. Is material moved only once and as short a distance as possible? Is material moved efficiently
in appropriate containers?
13. Is the plant laid out in continuous product line flows rather than in “shops”?
14. Are work teams trained, empowered, and involved in problem solving and ongoing
improvements?
IT 15. Do employees appear committed to continuous improvement?
16. Is a timetable posted for equipment preventive maintenance and ongoing improvement of
tools and processes?
17. Is there an effective project-management process, with cost and timing goals, for new
product start-ups?
18. Is a supplier certification process – with measures for quality, delivery, and cost performance
– displayed?
19. Have key product characteristics been identified, and are fail-safe methods used to forestall
propagation of defects?
20. Would you buy the products this operation produces?
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Figure 1: A Sample Lean Assessment Questionnaire
Source: https://maaw.info/ArticleSummaries/ArtSumGoodson2002.htm
1. List two factors that can be used to rate a lean plant.

S elf 2. Lean organisations procure on JIT basis and it requires that the _______
A ssessment should be very well integrated with organisation’s lean system.
Q uestions
12.2 LEAN ASSESSMENT TOOLS

For carrying out lean assessment in terms of performance, productivity,
manufacturing capacity or services, organisations use a variety of tools. Lean
assessment tools help in auditing the performance of the organisation after the
implementation of lean and, therefore, help in identifying lean improvements.
More often than not, the interaction between lean practices and the improvements
generated as a result of following lean practices are latent and need to be
investigated using any lean assessment tool.
Organisations can conduct lean assessment themselves by using tools, such as the
Lean Enterprise Self Assessment Tool (LESAT). An organisation may also develop
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Lean Assessment
a particular type of lean assessment tool that is fit for its purpose. Let us now study
about LESAT.
12.2.1 LEAN ENTERPRISE SELF ASSESSMENT TOOL (LESAT)

The Lean Enterprise Self Assessment Tool (LESAT) was developed by UK’s Lean
Advancement Initiative (LAI) at the Massachusetts Institute of Technology (MIT).
It was developed to assist organisations in carrying out an assessment of its lean
practices in a structured manner.
The LESAT is a tool that can be used by organisations for carrying out self-
assessment of the present state of leanness and its readiness to adopt lean. The
LESAT can be used to assess both the As-Is analysis and To-Be vision of an
organisation. It is a simple and easy-to-use tool. It focusses on lean attributes and
uses the concept of process capability maturity levels. The five levels of process
capability maturity are shown in Figure 2:
MATURITY Stable and flexible. Organization is focused on continuous improvement

Optimizing and is built to pivot and respond to opportunity and change. The
5
LEVEL
5 organization’s stability provides a platform for agility and innovation.
MATURITY
LEVEL
4
MATURITY
IT
Quantitatively
Managed
Measured and controlled. Organization is data-driven with quantitative
performance improvement objectives that are predictable and align to
meet the needs of internal and external stakeholders.
Proactive, rather than reactive. Organization-

4
Defined wide standards provide guidance across projects,

3
LEVEL
3 programs and portfolios.
MATURITY Managed on the project level.

Managed Projects are planned, performed,
2
LEVEL
2 measured, and controlled.
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MATURITY
LEVEL Initial Unpredictable and reactive.
1 Work gets completed but is 1
often delayed and over budget.
Figure 2: Five Levels of Process Capability Maturity

Source: https://pimcore.com/en/services/process-maturity
Under the LESAT, a total of 54 lean organisational practices are assessed. These, 54
practices are divided into three major sections, namely Leadership/Transformation,
Lifecycle Processes and Enabling Infrastructure.
Leadership/Transformation comprises 28 practices. Lifecycle Processes comprise

18 practices and Enabling Infrastructure comprises 8 practices.
Each of these 54 practices is assessed on a capability maturity scale of 1 to 5. For

each of the 54 practices, practice maturity is defined for each maturity level on a
maturity matrix assessment sheet.
Under Leadership/Transformation, the practices that are associated with an

organisation’s Transition to Lean (TTL) are evaluated. Here, elements that are
assessed include:
Strategic integration
Leadership and commitment
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Value stream analysis and balancing

Change management
Structure and systems

LESAT Section I
Lean transformation planning, execution and monitoring
The 28 practices assessed under Leadership/Transformation (Section I) are shown
in Figure 3: 28 Lean Practices
I.A. Enterprise Strategic Planning
I.D.4 Employee empowerment
I.A.1 Integration of Lean in strategic planning I.D.5 Incentive alignment
process
I.D.6 Innovation encouragement
I.A.2 Focus on customer value
I.D.7 Lean change agents
I.A.3 Leveraging the extended enterprise
I.E. Create & Refine Transformation Plan
I.B. Adopt Lean Paradigm
I.E.1 Enterprise-level Lean transformation plan
I.B.1 Learning and education in “Lean” for
enterprise leaders I.E.2 Commit resources for Lean
improvements
I.B.2 Senior management commitment
I.E.3 Provide education and training
I.B.3 Lean enterprise vision
I.F. Implement Lean Initiatives
I.B.4 A sense of urgency
I.F.1 Development of detailed plans based on
I.C. Focus on the Value Stream
enterprise plan
I.C.1 Understanding current value stream I.F.2 Tracking detailed implementation
I.C.2 Enterprise flow
I.G. Focus on Continuous Improvement
I.C.3 Designing future value stream
I.G.1 Structured continuous improvement
I.C.4 Performance measures processes
IT I.D Develop Lean Structure and Behavior
I.D.1 Enterprise organizational orientation
I.D.2 Relationships based on mutual trust
I.D.3 Open and timely communications
I.G.2 Monitoring lean progress
I.G.3 Nurturing the process
I.G.4 Capturing lessons learned
I.G.5 Impacting enterprise strategic planning
Figure 3: 28 Practices Assessed under Leadership/Transformation (Section I)

ESD.61J / 16.852J: Integrating the Lean Enterprise © Deborah Nightingale, 2005 Massachusetts Institute of Technology Page 12
Source: https://ocw.mit.edu/courses/aeronautics-and-astronautics/16-852j-integrating-the-lean-enterprise-
fall-2005/lecture-notes/13_lesat.pdf
As stated earlier, for each practice that is being assessed, practice maturity is
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defined for each maturity level. For example, the five levels of practice maturity
for lean enterprise vision are shown in Figure 4:
Level 1 Senior leaders have varying vision of lead, from none to

well-defined
Level 2 Senior leaders adopt common vision of lean
Level 3 Lean vision has been communicated and is understood by

most employees
Level 4 Common vision of lean is shared by the extended
Level 5 Stakeholders have internalized the lean vision & are an active
part of achieving it
Figure 4: Five Levels of Practice Maturity for Lean Enterprise Vision
Under Life Cycle Processes, practices associated with an organisation’s core

processes are evaluated. Here, elements that are assessed include acquisition,
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Lean Assessment
program management, requirements definition, product/process development,

supply chain management, production and distribution and support.
LESAT Section II
The 18 practices assessed under Life Cycle Processes (Section II) are shown in
Figure 5: 18 Lean Practices
• II.A. Business Acquisition and Program Management • II.D. Manage Supply Chain
• II.A.1 Leverage Lean capability for business • II.D.1 Define and develop supplier network
growth • II.D.2 Optimize network-wide performance
• II.A.2 Optimize the capability and utilization • II.D.3 Foster Innovation and knowledge
of assets sharing throughout the supplier network
• II.A.3 Provide capability to manage risk, cost, • II.E. Produce Product
schedule and performance
• II.E.1 Utilize production knowledge and
• II.A.4 Allocate resources for program capabilities
development efforts
• II.E.2 Establish and maintain a lean
• II.B. Requirements Definition production system
• II.B.1 Establish a requirements definition • II.F. Distribute and Service Product
process to optimize lifecycle value • II.F.1 Align sales and marketing to
• II.B.2 Utilize data from the extended production
enterprise to optimize future requirement • II.F.2 Distribute product in a lean fashion
definitions
• II.F.3 Enhance value of delivered products
• II.C. Develop Product and Process and services to customers and the enterprise
• II.C.1 Incorporate customer value into design • II.F.4 Provide post-delivery service, support,
of products and processes and sustainability
• II.C.2 Incorporate downstream stakeholder
values into products and processes
• II.C.3 Integrate product and process
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development
Figure 5: 18 Practices Assessed under Life Cycle Processes (Section II)
Each practice has five maturity levels, and practice maturity is defined for each
of these levels. For example, the five levels of practice maturity for ‘Incorporate
Downstream Stakeholder Values into Products and Services’ are shown in Figure 6:
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Level 1 Manufacturing issues are considered late in design
Level 2 Manufacturing & assembly issues are considered earlier in projects,

but in an ad hoc manner. Supplier & cost considerations are limited
Level 3 Multi-functional teams include some downstream disciplines

and key suppliers
Level 4 Priorities of downstream stakeholders are quantified as early as

possible in design, and used for process evaluation and improvement
Downstream stakeholders’ values in the extended enterprise are
Level 5 quantified, and balanced vie tradeoffs, as a continuous part of
the process
Figure 6: Five Levels of Practice Maturity for Incorporate Downstream Stakeholder Values
Under Enabling Infrastructure Processes, the practices associated with an

organisation’s supporting processes are evaluated. Here, elements that are assessed
include lean organisational enablers and lean process enablers such as finance,
information technology, human resources, and environmental health and safety.
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The eight practices assessed under Enabling Infrastructure Processes (Section III)
are shown in Figure 7:
Section Lean Practice

III. A. Lean Organisational III. A. 1 Financial system supports lean
Enablers transformation
III. A. 2 Enterprise stakeholders pull required
financial information
III. A. 3 Promulgate the learning organisation
III. A. 4 Enable the lean enterprise with information
systems and tools
III. A. 5 Integration of environmental protection,
health and safety into the business
III. B. Lean Process Enablers III. B. 1 Process standardisation
III. B. 2 Common tools and systems
III. B. 3 Variation reduction
Figure 7: Eight Practices Assessed under Enabling Infrastructure Processes (Section III)
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Each of the 54 practices is given a process capability score that corresponds to its
Summary Form Example

current level. Also, against each practice, the desired level is mentioned. This is
shown in Figure 8:
LESAT Enterprise Self-Assessment Tool (LESAT)

Section I - Lean Transformation/Leadership
Process Definition: Develop and deploy lean implementation plans throughout the enterprise leading to (1)- long-term sustainability, (2)-
acquiring competitive advantage and (3) satisfaction of stakeholders.
Capability Level
TTL Link Lean Practice Lean Characteristic Current Desired
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I.A. Enterprise I.A.1 - Integration of Lean in strategic Lean impacts growth, profitability and market
Strategic Planning planning process penetration
I.A.2 - Focus on customer value Customers pull value from enterprise value stream
I.A.3 - Leveraging the extended enterprise Value stream extends from customer through the
enterprise to suppliers
Average
I.B. Adopt Lean I.B.1 - Le arning and education in “Lean” “Unlearning” the old, learning the new
Paradigm for enterprise leaders
I.B.2 - Senior management commitment Senior management leading it personally
I.B.3 - Le an enterprise vision New mental model of the enterprise
I.B.4 - A sense of urgency The primary driving force for Lean
Average
I.C. Focus on the I.C.1 - Unde rstanding current value stream How we now deliver value to customers
Value Stream I.C.2 - En terprise flow “Single piece flow” of materials and information
I.C.3 - Des igning future value stream Value stream to meet the enterprise vision
I.C.4 - Performance measures Performance measures drive enterprise behavior
Average
I.D. Develop Lean I.D.1 - Enterprise organizational orientation Organize to support value delivery
Structure and I.D.2 - Relationships based on mutual trust “Win-win” vs. “we-they”
Behavior I.D.3 - Open and timely communications Information exchanged when required
I.D.4 - Employee empowerment Decision-making at lowest possible level
I.D.5 - Incentive alignment Reward the behavior you want
I.D.6 - Innovation encouragement From risk aversion to risk rewarding
I.D.7 - Lean change agents The inspiration and drivers of change
Average
Figure 8: The LESAT Summary Sheet

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Lean Assessment
After rating each practice on the process maturity level, average of the current and
desired scores is calculated. These averages are used to detect the gap between
the current and desired maturity levels. In order to understand the gap analysis
calculation, consider the following example as shown in Table 1:
Table 1: Current and Desired Process Capability Maturity Levels
Section Lean Practice Current Expected

Maturity Maturity
Score Score
Section I – Lean I. A. Enterprise Strategic 2.5 2.3
Transformation/ Planning
Leadership
I. B. Adopt Lean 2.7 2.8
Paradigm
I. C. Focus on the Value 1.8 1.8
Stream
I. D. Develop Lean 2.9 2.7
Structure and Behaviour
IT I. E. Create and Refine
Transformation Plan
I. F. Implement Lean
2
2.1
1.6
2
Initiatives
I. G. Focus on 2.5 2.3
Continuing
Improvement
Average score 2.357143 2.214286
Section II – Life-Cycle II. A. Business 2.2 2
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Processes Acquisition and
Program Management
II. B. Requirements 2 2.1
Definition
II. C. Develop Product 2.7 2.5
and Process
II. D. Manage Supply 2.1 2.5
Chain
II. E. Produce Product 2.1 3
II. F. Distribute and 2 3
Service Product
Average score 2.183333 2.516667
Section III – Enabling III. A. Lean 2.5 3
Infrastructure Organizational Enablers
III. B. Lean Process 2.7 3

Enablers
Average score 2.6 3
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After the management gets the hold of current (as-is) and desired (to-be) scores of all
Quick TIP
the 54 lean practices, they calculate the gap between these two states. Considering
You must remember
that LESAT is just these gaps, the management chalks out an action plan to close these gaps and set
one of the many the desired process capability levels at higher values so that the organisation can
lean assessment grow continuously.
tools. However,
it is used widely.
Another lean 12.2.2 WHY TO DO LEAN ASSESSMENT?
assessment
tool is the AME The four major reasons to carry out lean assessment are as follows:
Lean Sensei
Excel Tool which
Lean assessment reveals the gaps between the current and desired positions
has been developed of an organisation which gives a fair idea regarding the lean practices that
by the Association need to be improved.
for Manufacturing
Excellence (AME). Gain an understanding of the current condition of various lean practices that
can be compared and monitored.
Gain an ability to prioritise the lean areas that need to be improved and
distribute resources accordingly.
Lean assessment will set a direction for continuously reducing costs and
improving lean practices.
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12.2.3 WHO CONDUCTS LEAN ASSESSMENT?
Conducting a lean assessment is not mandatory by law. Therefore, it is entirely
up to the organisation in question to conduct lean assessment by taking help of
individuals or teams that it deems right. Usually, the lean assessment is conducted
by the following:
Internal team of employees
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Lean champions and/or plant managers can conduct the lean assessment
which can be reviewed by stakeholders
STUDY HINT
Any external lean consultant or consultancy agency can conduct an
Lean assessment
assessment which can be reviewed by organisation’s stakeholders
can be carried
out for an entire The organisation must take care that whosoever it chooses to conduct lean
factory, specific
area or for a value
assessment must be extremely well-versed with lean practices and processes. Also,
stream within an including the plant manager and lean champions increases the accuracy of lean
organisation. assessment.
3. Mention any two lean practices mentioned under the life cycle processes.
S elf
A ssessment 4. __________ is defined for each maturity level for each practice.
Q uestions
Make a list of at least 20 Indian organisations which have adopted lean

A ctivit y 1 practices. Also, research how many of them conduct lean assessment on a
regular basis. Study any one of the recent lean assessment reports of any of the
organisations in your list and prepare a short summary of the same.
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Lean Assessment
12.3 PROCESS OF LEAN ASSESSMENT

Conducting lean assessment helps an organisation in identifying breakdowns in
business planning, business processes, and business operations. Any defect in
planning, processes or operations leads to an increase in costs due to breakdowns,
non-elimination of non-value added activities, ineffective communication and
process inconsistencies. These problems can be resolved only if they are identified,
defined, quantified and fixed.
By undertaking lean assessment, the top management of an organisation can

clearly identify the areas of lean practices which need improvement. Under
lean assessments, organisations usually measure 13 building blocks of lean
manufacturing tools and concepts that are divided into three categories as follows:
1. Operational excellence
i. 5-S
ii. Quality Process
iii. Work Cells/Areas
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iv. Visual controls
v. Standard work
vi. Total Productive Maintenance (TPM)
2. Just-in-Time
vii. Continuous flow
viii. Pull Systems
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ix. Levelling
x. Quick changeovers
3. People
xi. Continuous improvement
xii. Training
xiii. Supplier/customer alliances
Let us now discuss how the process of lean assessment is carried out. The lean
assessment process is conducted in three phases as shown in Figure 9:
Planning and
Scoring Evaluation
Executing
Figure 9: Process of Lean Assessment
In the scoring stage, scoring sheets are used to allocate a score for each of the 13 lean
building blocks. Thereafter, in the evaluation stage, the average score is calculated
295
for the organisation using the lean assessment summary form and is compared
to World Class Manufacturing Industry 4.0 standard. Lastly, in the planning and
executing stage, management devises action plans to become even more lean. It
is relevant to mention here that each stage requires a lot of tasks, information and
forms. Let us now discuss each stage of the lean assessment process in detail.
12.3.1 SCORING
This stage makes use of scoring sheets. The lean score for each lean building block
is indicated in scoring sheets. For each lean building block, a scoring sheet is
developed. Each scoring sheet includes two parts as follows:
a. The first part of a scoring sheet is the information sheet, which includes the
definitions of the concerned lean building block, description of assessment
guidelines and a few tips on how the organisation can achieve Industry 4.0
standard.
b. The second part of a scoring sheet includes a summary of assessment
guidelines, scoring chart and some free space to write suggestions.
IT
For each guideline, the scoring sheet uses a 0-4 range to allocate up to 4 points.
The plant manager or the internal team that is conducting lean assessment takes
reference from the assessment guidelines and assign a score to the lean building
block that is being measured after duly determining which guideline best describes
the lean practice. In the scoring sheet, the points are recorded under the assessment
guideline. After a score has been recorded for each guideline, the average score is
calculated for each lean building block. This average score is mentioned in the
lowermost right cell of sheet.
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As an example, a sample scoring chart and assessment guidelines for the 5S
technique are shown in Table 2:
N ote
In case a concept Table 2: The 5S Scoring Sheet
or tool being
scored is not Points Sort Set-in- Shine Standardise Sustain
relevant to an Order and Simplify
area, then NA
(Not applicable) is 4 100% of 100% of area 100% of 100% of area 100% of area
written in place of
area area
score.
3 75% of area 75% of area 75% of area 75% of area 75% of area
Score 3 3 2 2 2
Average Score 2.4
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Lean Assessment
12.3.2 EVALUATION
Evaluation stage comprises three steps discussed as follows:
Step 1: Plot the scores on a radar chart: In the scoring stage, the average scores of
all the 13 lean building blocks are calculated. This data is used to plot a radar chart,
which includes all the lean building blocks.
Assume that we have the following scores for the 13 building blocks as shown in
Table 3:
Table 3: Scores of the 13 Building Blocks of Lean
Lean Building Block Score

5-S 2.5
Quality process 3.5
Work cells/Areas 3
Visual controls 3.5
Standard work 3
Continuous flow
Pull Systems
IT
Total Productive Maintenance (TPM) 2
3
2.5
Levelling 2
Quick changeovers 3.5
Continuous improvement 3
Training 2.5
Supplier/customer alliances 1
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The radar chart for this data will be created as shown in Figure 10:
Radar Chart for Scores of 13 Lean Building Blocks

Scope
5-S
3.5
Supplier/customer alliances Quality Process
3
2.5
Training 2 Work Cells/Areas
1.5
1
0.5 Visual controls
0
Quick Changeovers Standard work
Total Productive
Levelling
Maintenance (TPM)
Pull Systems Continuous flow
Figure 10: Radar Chart for Scores of 13 Lean Building Blocks
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Step 2: Complete the summary form: After Step 1 is completed, a lean assessment
summary form is created in which the overall average score of lean is calculated.
This is shown in Table 4:
Table 4: Calculating Average Scores of the 13 Building Blocks of Lean
Lean Building Block Score

A. Operational Excellence
5-S 2.5
Quality process 3.5
Work cells/Areas 3
Visual controls 3.5
Standard work 3
Total Productive Maintenance (TPM) 2
B. Just-in-Time
Continuous flow 3
Pull Systems 2.5
Levelling 2
IT Quick changeovers
C. People
3.5
3
Training 2.5
Supplier/customer alliances 1
Total Score 35
Average Score 2.6923
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Step 3: Compare organisation’s lean average to world class average: The average
calculated in the previous step is compared with the World Class Manufacturing
Industry 4.0 ratings.
The world class rating scale is presented as shown in Table 5:
Table 5: World Class Rating Scale
Average Lean Score Range Rating

0.0 – 0.5 Organisation shows no commitment towards lean.
0.6 – 1.5 Organisation has just started its lean journey.
1.6 – 2.5 Lean changes are becoming evident.
2.6 – 3.5 Results of lean implementation can be felt at every
level.
3.6 – 4.0 Lean implementation is really successful and all
levels demonstrate results.
If you compare the lean score calculated in Step 2 with world class rating scale,
you can easily assess that the lean implementation has been successful, but it can
further be improved.
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Lean Assessment
12.3.3 PLANNING AND EXECUTION

After successfully completing stages 1 and 2, the organisation comes to know its
positive areas as well as its fallacies. It also comes to know how well it is faring
with respect to the overall industry. Using all these details, the organisation can
develop plans to become leaner than before.
5. In the scoring sheet, the points are recorded under the __________.
S elf 6. In the evaluation stage, the average score is calculated for the organisation
A ssessment using the lean assessment summary form and it is compared to
Q uestions __________ standard.
12.4 SUMMARY
Assessment can be defined as a practice of collecting relevant data and evaluating,
measuring and analysing it using a wide variety of tools and techniques in order
to generate an idea about how well things are moving as compared to what was
IT
initially planned. Assessment can be done for individuals, groups or organisations.
Assessment provides critical information regarding the performance level of the
individual or organisation being assessed. Assessments also help reveal problems
and defects.
Organisations that adopt and follow lean philosophy are prompted to assess
whether they have benefitted from implementing lean and the level to which they
have benefitted. For this purpose, they conduct lean assessments under which
the effects of implementing lean are documented. Lean assessment approaches
are used for evaluating the level of leanness of an organisation. Ideally, a lean
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plant is rated with respect to commitment to quality, condition and maintenance
of equipment and tools, customer satisfaction, levels of inventory and work in
process and management of complexity and variability, etc.
Lean assessment tools help in auditing the performance of organisation after

implementation of the lean and therefore, help in identifying lean improvements.
The Lean Enterprise Self Assessment Tool (LESAT) was developed by UK’s Lean
Advancement Initiative (LAI) to assist organisations in carrying out an assessment
of its lean practices in a structured manner. The LESAT was developed to assist
organisations in carrying out an assessment of its lean practices in a structured
manner.
Conducting lean assessment helps an organisation in identifying breakdowns

in business planning, business processes and business operations. Any defect in
planning, processes or operations leads to increase in costs due to breakdowns,
failing to eliminate NVA activities, ineffective communication and process
inconsistencies. These problems can be resolved only if they are identified, defined,
quantified and fixed.
Under lean assessments, organisations usually measure 13 building blocks of lean

manufacturing tools and concepts that are divided into three categories namely
299
operational excellence, just-in-time and people. The lean assessment process is

conducted in the following three phases:
1. Scoring
2. Evaluation
3. Planning and executing
In the scoring stage, scoring sheets are used to allocate score for each of the 13 lean
building blocks. Thereafter, in the evaluation stage, the average score is calculated
for the organisation using the lean assessment summary form and it is compared
to World Class Manufacturing Industry 4.0 standard. Lastly, in the planning and
executing stage, the management formulates action plans to become even more
lean.
12.5 KEY WORDS

Assessment: A systematic method of using a wide variety of tools and
techniques for evaluating, measuring and analysing a situation
Radar chart: A two-dimensional chart that represents three of more
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quantitative variables in a radial-grid like structure
Audit: An inspection of an organisation’s processes or systems
Rating scale: A type of multiple-choice question scale that is used to gather
information related to a specific topic of interest
Fail-safe: A lean practice which means that a device will not endanger the
lives or property of any concerned individual or entity when it fails
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12.6 CASE STUDY: ABC’S ASSESSMENT OF ITS LEAN JOURNEY
ABC is an electronic equipment maker, located in Delhi, India. In the year 1998, it
embarked on its continuous improvement journey by adopting lean. It conducts a
thorough assessment of its lean implementation every four years. It last conducted
its lean assessment in 2014 and the lean assessment scheduled for 2018 could
not be conducted due to certain circumstances. The management postponed
the assessment to be carried out at the starting of 2019. Mr. Avinash, the CEO of
ABC delegated the duty of carrying out lean assessment to the Plant Manager,
Mr. Rudra.
Rudra started by listing various lean practices that were to be evaluated. He

prepared a final list consisting of 10 major lean practices. He also used the scoring
method to generate the score for each of the 10 lean practices as follows:
Lean Practice Score

1. Strategic planning 2
2. Adaptivity to lean 2.4
3. Value stream mapping 1.8
4. Implementing lean initiatives 3
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Lean Assessment
Lean Practice Score

5. Continuous improvement 3
6. Product and process development 2.9
7. Supply chain management 3.2
8. Production 3.5
9. Distribution and service 3.6
10. Process enablers 3.1
QUESTIONS
1. What according to you is the average lean score of ABC and how does it
compare with Industry 4.0?
(Hint: Lean average of ABC is 2.85 and when compared to World
Manufacturing Rating scale, ABC is at a stage where lean changes become
evident.)
2. After evaluation, Rudra sits with his team to develop an improvement action
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plan. Which two areas should he target first?
(Hint: Value stream mapping and strategic planning.)

1. How many lean practices are defined under the LESAT?
Exam Check
a. 50
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b. 52
c. 54
d. 56
2. Which of the following is not a recognised process improvement
methodology?
a. Lean
b. Six Sigma
c. TOS
d. TOC
3. Organisations using visual management systems use _________ boards to
help employees in finding locations, tools and tasks.
a. Kaikaku
b. Kakushin
c. Kanban
d. Kaizen
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4. The Lean Enterprise Self Assessment Tool (LESAT) was developed by UK’s
Lean Advancement Initiative (LAI) at the ____________.
a. Harvard University
b. University of Oxford
c. University of California
d. Massachusetts Institute of Technology (MIT)
5. At which level of process capability are the projects planned, performed,
measured and controlled?
a. Initial
b. Managed
c. Defined
d. Optimising
6. Which of the following is not a valid section as under LESAT?
a. Operational Excellence
IT b. Leadership/Transformation
c. Enabling Infrastructure
d. Lifecycle Processes
7. In the acronym LESAT, ‘E’ stands for _______.
a. Early
b. Eclipse
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c. Economic
d. Enterprise
8. An organisation, O, has just started to become proactive in its approach.
What level of process capability maturity may it have achieved to reach this
stage?
a. Defined
b. Managed
c. Quantitatively managed
d. Optimising
9. Which of the following is not a lean process enabler?
a. Process standardisation
b. Common tools and systems
c. Variation reduction
d. Financial system
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Lean Assessment
10. Which of the following is the second stage of the lean assessment process?
a. Planning and execution
b. Execution
c. Evaluation
d. Scoring
11. Which of the following is not an operational excellence tool?
a. 5-S
b. Levelling
c. Standardised work
d. TPM
12. Which type of assessment is based on the perceptions of people and follows
a naturalistic approach to its subject matter?
a. Qualitative assessment
b. Financial assessment
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c. Lean assessment
d. Quantitative assessment
13. According to the world class rating scale, an average lean score of 1.2 means
that _______________.
a. Lean changes are becoming evident
b. Results of lean implementation can be felt at every level
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c. Organisation has just started its lean journey
d. Organisation shows no commitment towards lean
14. Any defect in planning, processes or operations leads to increase in costs due
to breakdowns, failing to eliminate ________.
a. VA activities
b. ENVA activities
c. NVA activities
d. None of these
15. Quick changeovers are related to ____________.
a. Operational excellence
b. People
c. JIT
d. Employees’ efficiency
16. Under Life Cycle Processes, practices associated with an organisation’s
____________ are evaluated.
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17. While undertaking the lean assessment, including the plant manager and
_________ increases the accuracy of lean assessment.
18. In the evaluation stage, the average score is calculated for the organisation
using ______________ and it is compared to World Class Manufacturing
Industry 4.0 standard.
19. In scoring stage, for each guideline, the scoring sheet uses a _____ range.
20. After the management gets the hold of current (as-is) and desired (to-be)
scores of all the 54 lean practices, they calculate the ____ between these two
states.
21. In LESAT, against each of the 54 lean practices, the _______ and ______ levels
of process capabilities are mentioned.
22. Under the LESAT, Leadership/Transformation comprises 28 practices. (True/
False)
23. Attitude of the production line workers with respect to internal and external
customers reveals information about the levels of customer satisfaction.
(True/False)
24. Lean champions are not directly involved with the process of lean assessment.
IT (True/False)
25. Conducting a lean assessment is mandatory by law. (True/False)

1. An organisation XYZ resolved to undertake lean assessment. The
organisation assigned this task to Mr. Prabhakar. Mr. Prabhakar made a list
of six important lean practices and scored them as follows:
M
Lean Practice Score
Enterprise’s strategic planning 2.5
Adopt a lean paradigm 2.1
Focus on the value stream 2.0
Develop a lean structure and behaviour 2.8
Create and refine a transformation plan 2.5
Implement lean initiatives 3
The management wishes to achieve an overall lean score of 3.5. They asked
Mr. Prabhakar to assess the gap in these six lean practices. What is the gap if
you consider the lean average up to two decimal places?
a. 0.50
b. 0.51
c. 0.52
d. 0.53
304
Lean Assessment
2. Match the options in List 1 with options in List 2.
List 1 List 2
A. Lean i. Check sheet
B. Six Sigma ii. Kanban
C. Lean Assessment iii. Scoring sheet
a. A – i; B – ii; C – iii
b. A – ii; B – i; C – iii
c. A – iii; B – i; C – ii
d. A – i; B – iii; C – ii
3. In which of the following instances can we say that the Lean Enterprise
Vision has been optimised?
a. Stakeholders have internalised lean vision.
b. Lean vision is communicated to and is understood by all employees.
c. Senior leadership has well defined vision of lean.
IT
d. None of these.
4. Consider the following data compiled by an organisation for certain lean
practices:
Lean Practice Current Maturity Score

Enterprise Strategic Planning 1.7
M
Adopt Lean Paradigm 1.5
Focus on the Value Stream 1.8
Develop Lean Structure and Behaviour 1.6
Create and Refine Transformation Plan 1.9
Implement Lean Initiatives 1.8
Business Acquisition and Program Management 2.0
Requirements Definition 1.9
Lean Organisational Enablers 1.5
If the desired lean score that the organisation wishes to achieve is 3.2, then
what is the gap between the current and desired lean scores?
a. 1.40
b. 1.42
c. 1.44
d. 1.46
305
12.9 ANSWER KEY
Topic Q. No. Answer

Lean Assessment 1. Scheduling system, supply chain integration
2. suppliers
Lean Assessment Tools 3. Supply chain management, requirements
definition
4. Practice maturity
Process of Lean Assessment 5. assessment guideline
6. World Class Manufacturing Industry 4.0
B.
IT SHORT ANSWER QUESTIONS
Q. No. Answer
1. c. 54
2. c. TOS
3. c. Kanban
4. d. Massachusetts Institute of Technology (MIT)
5. b. Managed
M
6. a. Operational Excellence
7. d. Enterprise
8. a. Defined
9. d. Financial system
10. c. Evaluation
11. b. Levelling
12. a. Qualitative assessment
13. c. Organisation has just started its lean journey
14. c. NVA activities
15. c. JIT
16. core processes
17. lean champions
18. lean assessment summary form
19. 0–4
20. gap
306
Lean Assessment
Q. No. Answer
21. desired; current
22. True
23. True
24. False
25. False
Q. No. Answer
1. c. 0.52
2. b. A – ii; B – i; C – iii
3. a. Stakeholders have internalised lean vision
4. d. 1.46
IT
@ SUGGESTED BOOKS
MCS Media Inc. (2004). The Lean Assessment for Job Shops and Small
Manufacturers (1st ed.). Chelsea.
M
Nightingale, D., & Srinivasan, J. (2011). Beyond the lean revolution. New York,
N.Y.: American Management Association.
Levinson, W. (2017). Lean Management System LMS:2012. Florence:
Productivity Press.
E-REFERENCES
(2019). [Ebook]. Retrieved from https://core.ac.uk/download/pdf/18321057.
pdf
(2019). [Ebook]. Retrieved from https://dspace.mit.edu/bitstream/handle/
1721.1/84694/PRD_LESAT_2_Facilitators_Guide_Feb2012.pdf?sequence=1
307
M
IT
ABBREVIATIONS
ACR: Average Completion Rate NVA: Non-Value-Added

C&A: Complete and Accurate OEE: Overall Equipment Effectiveness
CBA: Cost-Benefit Analysis PDCA: Plan Do Check and Act
CEO: Chief Executive Officers POUS: Point of Use Storage
CTQ: Critical to Quality QATS: Quality at the Source
CWQC: Company Wide Quality Control QC: Quality Circles
DMADV: Define, Measure, Analyse, RCA: Root Cause Analysis

Design and Verify
IT
DMAIC: Define, Measure, Analyse,
Improve and Control

ROA: Return on Assets
ROI: Return on Investment
RP: Right Product
DMAIC: Define, Measure, Analyse,
Improve, Control RQ: Right Quantity
DOE: Design of Experiments RT: Right Time
DPMO: Defects Per Million Opportunities SIPOC: Suppliers, Inputs, Process,
M
Outputs, Customers
DPO: Defects Per Opportunity
SMED: Single Minute Exchange of Die
DPU: Defects Per Unit
SOP: Standard Operating Procedures
ENVA: Essential Non-Value-Added
SPI: Streamlined Process Improvement
FMEA: Failure Mode and Effects Analysis
SSRI: Six Sigma Research Institute
FS: Foundation Stone
TIMWOOD: Transportation,
JIT: Just-in-Time
Inventory (I), Motion (M), Waiting (W),
KMS: Knowledge Management System Overproduction (O), Over-processing (O),
Defects (D)
KPI: Key Performance Indicator
TOC: Theory of Constraints
KPIV: Key Process Input Variable
TPM: Total Productive Maintenance
KPOV: Key Process Output Variable
TPS: Toyota Production System
LAI: Lean Advancement Initiative
TQC: Total Quality Control
LESAT: Lean Enterprise Self Assessment
Tool TQM: Total Quality Management
LSL: Lower Specification Limit TR: Throughput Rate
LSS: Lean Six Sigma TTL: Transition to Lean
309
USL: Upper Specification Limit VOE: Voice of Employees

VA: Value-Added VOP: Voice of Process
VACAF: Valuable, Available, Capable, VSM: Value Stream Mapping
Adequate and Flexible
WIP: Work in Progress or Work in
VOB: Voice of Business Process
VOC: Voice of Customer ZQC: Zero Quality Control
IT
M
310

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Lean Management Systems

Subject Code: S3W14

Academic Course Review Committee

Dr. Vishal Talwar

Dr. Arvind Kulkarni

After studying this subject, you should be able to:

Chapter 1: Introduction to Lean

Lean Six Sigma

 Explain the meaning of lean

Lean is also associated with the concept of Kaizen (continuous improvement).

1.1 MEANING OF LEAN

Lean can also be expressed as a combination of 0% wastage and 100% customer-

By implementing lean in their production processes, organisations can become

Organisations apply lean principles to achieve the following objectives:

 Reducing the production cycle time

1.1.1 PRINCIPLES OF LEAN

Figure 1 presents the five principles of lean:

Figure 1: Five Principles of Lean

1.1.2 ACHIEVING OVERALL REDUCTION THROUGH LEAN

Figure 2 represents the 3Ms:

Work that creates a burden for the

Figure 2: The 3Ms of Lean

Some of the measures to reduce inventory waste are:

1.1.3 PROMINENT LEAN TECHNIQUES

Figure 3: Visual Management

zz Improve responsiveness to customer demand

Work Flow Section-3

Figure 4: Cellular Layout

 Supply chain management: This is the design and management of processes

 Kanban: In Japanese language, Kanban means a signboard. Kanban is a

1. Lean = ______________ wastes + _______________ value.

1.2 EARLY CONTRIBUTIONS IN LEAN

Stop and notify

Toyota Production System “House”

Figure 5: Toyota Production System (Lexicon, 2008)

The TPS was based on two key concepts:

1.2.1 CONTRIBUTION OF HENRY FORD

Some major contributions of Henry Ford to the development of lean manufacturing

1.2.2 CONTRIBUTION OF KAORU ISHIKAWA

His major contributions to the development of lean manufacturing are:

1.2.3 CONTRIBUTION OF ARMAND V. FEIGENBAUM

zz Embed quality permanently as a part of process improvement

1.2.4 CONTRIBUTIONS OF TAIICHI OHNO AND SHIGEO SHINGO

The major contributions of Taiichi Ohno to the development of lean are:

The main contributions of Shingo to lean development are:

Shingo’s main contribution to the SMED process was his suggestion to

Figure 6: Poka-Yoke by Shingo

According to Shingo, to achieve zero defects, it is important to consider the human

1.2.5 CONTRIBUTION OF BILL SMITH

1.2.6 CONTRIBUTION OF MICHAEL L. GEORGE

Lean Six Sigma

Figure 7: Lean Six Sigma

1.2.7 CONTRIBUTIONS OF CHARRON, VOEHL, HARRINGTON AND

1.2.8 CONTRIBUTION OF H. JAMES HARRINGTON

to generate faster, major improvements in organisations. He has written several

1.2.9 CONTRIBUTION OF GENERAL ELECTRIC

9. Which company is considered to be the birthplace of lean manufacturing?

1.4 KEY WORDS

The training material was customised to suit Discovery’s requirements. Instructors

1.6 SHORT ANSWER QUESTIONS

5. Standard operating procedures help reduce which waste?

15. Who invented the DMAIC stages of Poka-Yoke?

1.7 HIGHER ORDER THINKING SKILLS (HOTS)

Reducing the production cycle time

Supply chain management: This is the design and management of processes

Kanban: In Japanese language, Kanban means a signboard. Kanban is a

1. Lean = wastes + _ value.

Lean includes a thorough study of work processes and systems using scientific

N ote Lean makes a distinction between value-added and non-value-added work,

Better customer relations: Lean management starts by defining value