MEE1016 LEAN ENTERPRISES AND NEW MANUFACTURING TECHNOLOGY

Module:1 Introduction to Lean manufacturing

Definition and concept of lean manufacturing; Principles of lean manufacturing – Just in time –
Types of pull systems - Toyota Production systems – Benefits of lean manufacturing – Theory of
constraints – Reduction of wastes.

Module:2 Lean Manufacturing Tools-I

Basic tools of lean manufacturing: 5S, Total Productive Maintenance, Key Performance
Indicator, Overall Equipment Effectiveness, Plan Do Check Act, Root Cause Analysis, Poka
Yoke, Work Cell, Bottleneck analysis, continuous flow.

Module:3 Lean Manufacturing Tools-II

Secondary tools of lean manufacturing: Gemba, Heijunka,HoshinKanri, Jidoka, Load leveling,

Mind maps, 5 whys, SMDE, Six Big Losses, Standardized work, Visual factory, Zero quality
control.

Module:4 Strategic Issues and Lean implementation

Strategic issues: - Actions - Issues - Focus - Leadership - Management of teams – Training.

Focused factory concept – Availability, Variability, Lean implementation strategies, causes for
failures, sustaining lean, and constraint management.

Module:5 Process Mapping and Value stream mapping

Process mapping – Need for process map- Types- Detailed instructions - common mistakes in
mapping - limits – facilitation; Value stream mapping: - Overview - Where to use – When to
use- Step by step approach – How to use – Present and future states - VSM symbols.

Module:6 Lean accounting

Lean accounting definition, Need for lean accounting, benefits of lean accounting, Lean
accounting Vs traditional cost accounting, Activity based costing - Product costing - Volume
adjusted costing, Target costing.

Module:7 Cellular manufacturing and Group technology

Work cell – Cell design - Facility planning – Plant layout – Balancing the work in work cells –
Takt time – Defining - Benefits - Uses – Limitations; Facilities planning tools; Group technology
coding classification; Productivity Improvement Aids.

Module:8
Text Book(s)
Pascal Dennis, Lean production Simplified, Productivity press, New York, 2013.

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Reference Books
P. James Womack, Lean Thinking: Banish Waste and Create Wealth in Your Corporation,
Simon & Schuster, 2003.

Lean Manufacturing Tools:

1. Kaizen

What is Kaizen?

Kaizen is the Japanese word for “continual improvement.” The term refers to activities that
improve every function of a business and is generally applied to manufacturing, but can be used
to make almost any business more efficient.

By definition, Kaizen includes the involvement of all employees, from upper management to
assembly line workers and can be used to improve every process in a supply chain, from
purchasing to logistics. The lean manufacturing tool was first used by the Japanese in World War
Two and was a major influence of the book “The Toyota Way.”

What is the goal of Kaizen?

Kaizen seeks to improve standardized processes in order to eliminate waste, fix workflow issues,
and solve business problems.

How is Kaizen implemented?

The Kaizen method generally involves 5 primary steps:

1. Identify problem area that will be given focus.

2. Utilize videotape to analyze current method.
3. Test and evaluate improvement tactics.
4. Implement improvements.
5. Analyze results and present to upper management for feedback.

What is Kaizen most applicable to?

The Automotive industry. In fact, the Toyota Production System made the tool famous. If
problems occur within the production process, Toyota assembly line personnel and their
supervisors are expected to stop the production process and begin a Kaizen.

2. One-Piece Flow

What is One-Piece Flow?

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One-Piece Flow is the sequence of a product or service through a process that is one unit at a
time. One-Piece Flow is the opposite of batch processing, where a large number of products are
created at once and they are sent through the manufacturing process as a batch or group. In One-
Piece Flow the focus is on the manufacturing of the product itself rather than the waiting,
transportation, and storage of the product.

What are the advantages of One-Piece Flow?

The advantages are:

 Ability to detect defects earlier and more accurately.

 More flexibility for customization and meeting customer demands.
 Reduces costs by eliminating waste.
 Reduce the amount of work in progress to make each step more efficient.
 Easier to predict shipment times.

To increase efficiency, companies can choose to implement One-Piece Flow or simply reduce
the number of products produced in a batch.

3. Jidoka

What is Jidoka?

Jidoka was invented in 1896 and was used to stop the shuttle of an automatic loom in a case
where a thread broke. Not only did this reduce the number of defects when threading, it allowed
operators to operate multiple looms at once instead than having to watch only one in case
something went wrong. It is essentially automation with a human element.

What are the principles of Jidoka?

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The principles can be broken down into four steps:

1. Discover an abnormality or problem.

2. Stop the operation process.
3. Fix the problem at hand.
4. Discover the root cause to prevent future issues.

The primary innovation Jidoka brought to lean manufacturing is the idea of examining a
manufacturing issue in the middle of the process rather than at the end. Inspecting throughout the
manufacturing process can play a key role in preventing defects and fixing problems before they
cause significant damage.

4. Poka Yoke

What is Poka Yoke?

Poke Yoke was developed by Toyota and is very similar to Jidoka. The idea of Poka Yoke is to
prevent mistakes from becoming defects. Mistakes, it argues, are inevitable, but defects that
actually reach customers are preventable. The goal is to create a form of quality control that
highlights defects automatically and eventually takes humans out of the equation.

Why use Poka Yoke?

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The tool was invented because of human error. Humans that perform repetitive manufacturing
tasks day in and day out can very easily miss common mistakes and defects. Automation was
necessary to improve the manufacturing process.

A real-life example of Poka Yoke? An alarm that goes off automatically when you leave a car
without turning off the headlights. Another example is a conveyer belt that rejects a product that
is underweight. The goal is to prevent mistakes automatically, without human inspection.

5. Visual Management

What is Visual Management?

Visual Management is a communication technique that uses visual aids to convey messages
quicker and more efficiently

What is the goal of Visual Management?

The objectives of Visual Management are:

 Clarify waste.
 Display problems in a simpler way.
 Clearly indicate your efficiency goals.
 Increase effective communication.

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An example of Visual Management? Stock controls, auditing boards, and shadow boards.
Oftentimes, visual management can improve communication and help improve efficiency. Other
times, visual aids can become confusing and too much to remember.

Where is Visual Management best applied? Work instructions can often be simplified and far
easier to understand when visual aids are included. For example, if work must build a piece of
furniture from multiple parts, it will often be better understood in a visual format. It is
particularly useful for tasks that are difficult to explain with words alone. Another example may
be showing works a picture of a completed task.

6. Kanban
What is Kanban?

Kanban is the Japanese word for “Signal Card.” In previous decades, manufacturing workers
would fill out a signal card when a part was running low. The signal card would be sent to a team
or employee that’s job was to order more of that part. Today, this process is mostly
computerized. The idea of Kanban is to buy more parts only when needed.

The goal of Kanban? The primary goal of Kanban is to reduce waste. If parts are only bought
when needed, you are less likely to waste time, money, or space ordering unnecessary parts.
However, if parts are bought automatically, without knowing if they are needed, it can cut into a
company’s profits.

The strategy creates more efficient processes because the strategy is implemented based on
consumer demand. If there is a lot of demand for a product only then should you order more? If
there isn’t sufficient demand, companies can prevent unnecessary orders.

7. Demand Management

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What is Demand Management?

Demand Management is a lean tool used to identify all demand coming from an external
environment, manage it, and input it into a supply chain within a company.

The goal of Demand Management:

Demand Management has three primary goals:

 Improve forecast accuracy.

 Lessen investment in inventory.
 Create a more effective balance between supply and demand.

How is Demand Management implemented? The main element of implementing Demand

Management is creating a more transparent supply chain. Companies must ensure transparency
from all suppliers working with a company, from the largest to the smallest. By ensuring that
every player in the supply chain is transparent, you can begin to create a more efficient supply
chain.

Next, companies must determine, which inventory is unnecessary and can be reduced. Having
too much inventory is expensive and difficult to maintain. Ultimately, this technique gets
products out to consumers more efficiently.

8. Heijunka

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What is Heijunka?

Heijunka is the Japanese word for “leveling.” Heijunka is meant to level the type and quantity of
production while reducing batching. Ford Motor was once known for manufacturing cars in
batches. Toyota used Heijunka to minimize batching and create a more efficient manufacturing
process.

What is the goal of Heijunka? To reduce inventories, capital costs, manpower, and production
time to a minimum.

When is Heijunka implemented? According to many Lean experts, Heijunka is best

implemented after a company has already implemented more basic lean principles?

What’s a good example of Heijunka? Say a hat manufacturer receives 500 orders for hats
every week. 100 on Monday, 50 on Tuesday, 50 on Wednesday, and 300 on Thursday. Instead of
manufacturing 500 hats at the beginning of the week or the exact amount needed each day, the
company would produce exactly 100 hats per day. By producing the same amount every day, the
factory can optimize the manufacturing process for 100 hats and therefore create a more efficient
process.

9. Just in Time

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What is Just in Time?

As you could probably guess, Just in Time is a lean tool that calls for the production of what a
customer wants, when they want it, in the quantity they want it, and where they want it. Instead
of creating a large stock of a product that sits in warehouses, you only create as much of an item
as a customer actually wants. This reduces unnecessary inventory and ensures that companies
only spend on the stock that will be paid for.

What is the history of Just in Time?

Just in Time was invented by Toyota during WWII. The tool was invented at a time when
producing extra stock was simply too expensive and not possible. Companies could only afford
to produce what a customer actually wanted.

The idea for Just in Time came from a visit to US supermarkets by Toyota managers. They
noticed that shelves were only filled when a product ran out, not before that.

10. Takt Time

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What is Takt Time?

Takt Time comes from the German word for “pulse.” It’s the maximum amount of time a
product needs to be produced while still meeting consumer demand. Takt creates a rhythm across
a supply chain to ensure continuous flow and full utilization of available resources.

What is the goal of Takt Time? The goal of Takt is to deliver the right product to the right
customer at the right time, all with minimal waste. It ensures that products are manufactured in
the most efficient way while meeting consumer demand.

Another goal of Takt Time is to create a solid flow of operations within a supply chain.
Measuring Takt Time will allow managers to determine capacity and synchronization issues
within a supply chain and then find proper solutions.

Example of Takt Time? Here is an example:

Total Time: 8 Hrs X 60 Min = 480 Min

Breaks: 50 Min

Time Available : 430 Min

Customer Demand in 8 Hrs: 100 Pieces

Takt Time: 430 / 100 = 4.3 Min = 258 Sec

11. Bottleneck Analysis

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What is a Bottleneck?

Bottleneck (or constraint) in a supply chain refers to the resource that takes the longest time in
operations. When hiking, for example, a bottleneck refers to the slowest member of a hiking
group. That member can determine the speed of the entire group. The same goes for processes in
manufacturing. If one part of a supply chain is unnecessarily slow, it can reduce the speed and
efficiency of the entire manufacturing process.

The goal of Bottleneck Analysis?

The goal of Bottleneck Analysis is to determine the slowest parts of the manufacturing process
and then figure out how to speed them up. The process can be costly, but will usually lead to
increased efficiency and profits. Ignoring a bottleneck issue can be very costly down the line.

When should Bottleneck Analysis be implemented? When managers or operators suspect that
the manufacturing process is taking too long. At this point, managers will try to determine
exactly where the bottleneck is occurring.

12. Andon

What is Andon?

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Andon is a signaling system used in the manufacturing process when there is an abnormality or
some sort of important action is required. It is a form of visual management.

How is it used? In manufacturing, Andon lights are generally used in assembly lines. Different
colored lights are used to signal different problems and actions required. Operators may turn on
an Andon in order to signal that there is a problem in an assembly line. In an office setting, a red
colored light (Andon) may signal that a fax machine or printer is broken.

In cars, warning lights on a car’s dashboard would be examples of Andons. Andons work best
when they are highly visible and easy to understand. They must go hand in hand with an action.
So, for example, an Andon warning light on a car that signals low gas, would indicate a clear
action: fill up the tank with more gas.

13. Gemba

What is Gemba?

In Japanese, Gemba means “the real place.” In business, refers to an area where there is value
created. In manufacturing, it refers to the factory floor. It can also be a construction site, sales
floor, etc. The idea of Gemba in lean manufacturing is that management must go to factory floor
to search and fix visible problems. Manufacturing problems, Gemba argues, cannot be solved
from an office. They require an actual physical presence by problem solvers on the
manufacturing floor.

How is Gemba implemented?

Gemba is a step by step process:

1. Engineers physically go to manufacturing floor to observe processes.

2. Engineers collect data and understand the work being done
3. Engineers ask questions.
4. Engineers learn about problems and come up with solutions.

Gemba Walks refer staff taking the time to walk through the factory, examine what is going on,
and determine if there are any issues. In the lean management philosophy, staff are expected to
do Gemba Walks at least once a week.

14. Hoshin Kanri

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What is Hoshin Kanri?
Hoshin Kanri is a seven-step planning process that involves a systematic method to meet
strategic planning goals and manage progress towards those goals.

What is the goal of Hoshin Kanri? The goal of Hoshin Kanri is to determine your strategic
objectives and then align them with specific resources and action plans to meet those objectives.

What are the 7-steps of Hoshin Kanri?

The 7-steps of Hoshin Kanri:

1. Determine an organizational vision. Figure out what your current mission and long-term
vision is.
2. Establish breakthrough objectives. Determine what significant improvements a business
needs in the next three to five years.
3. Come up with annual objectives to complete on a yearly basis.
4. Determine metrics to measure objectives.
5. Implement objectives.
6. Review objectives monthly. Determine your progress each month to see where your
business needs improvement.
7. Review objectives yearly. Determine your progress each year to see where your business
needs improvement.

15. Overall Equipment Effectiveness (OEE)

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What is OEE?

OEE is a system used to measure manufacturing productivity. It measures the percentage of time
that a manufacturer is truly productive. So, a 100% would mean that a manufacturer is
productive 100% of the time. OEE includes measurement of quality, performance, and
availability.

What is the goal of OEE?

By measuring productivity in terms of time, manufacturers can gain insight into how to improve
overall manufacturing performance. The system helps to identify waste, track progress, and
improve manufacturing equipment efficiency.

What do quality, performance, and availability really mean?

 Quality measures the number of defects. A 100% score indicates that there are zero
defects.
 Performance measures slow cycles and stop. A 100% score indicates everything is
running as quickly as possible.
 Availability takes into account any stops. A 100% score indicates that the process is
always running during set production times.

16. Cellular Manufacturing

What is Cellular Manufacturing?

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Cellular Manufacturing is the process of producing similar products in one cell. The product, in
Cellular Manufacturing, moves through the production process in a single unit without
interruptions. In Cellular Manufacturing, similar products can be produced on the same assembly
line.

What are the benefits of Cellular Manufacturing?

The benefits of Cellular Manufacturing include:

 Group similar products together to reduce time of changeover.

 Effectively utilize space during entire production process.
 Increase flexibility and transparency.
 Reduce lead time.
 Increase overall productivity.
 Enhance teamwork and communication between employees and departments.

Example of Cellular Manufacturing? A metallic case arrives in a factory and needs to be

assembled. Assembly requires a variety of different steps. The goal of Cellular Manufacturing is
for all the steps to occur in one area, in a single cell. This reduces the time it takes to transport
the parts during the production process.

17. Continuous Improvement

What is Continuous Improvement?

Continuous Improvement is a methodology within lean manufacturing that advocates following

formal practices to improve efficiency over time.

What are the benefits of Continuous Improvement?

The benefits of Continuous Improvement include:

 Efficient workflows.
 Saves time.
 Reduces cost.
 Reduces resources needed.

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How is Continuous Improvement implemented? Continuous Improvement is implemented in
four steps:

1. Figure out what needs to improvement and create a plan.

2. After plan is complete, implement the plan.
3. Collect data to figure out if the plan worked and if it needs improvement.
4. Once the plan has worked on a small scale, implement it on a wider scale.

18. Total Productive Maintenance

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What is Total Productive Maintenance?

Total Productive Maintenance is a lean tool used to prevent machine downtime within the
production process. The goal is to limit downtime as much as possible in order to increase
production efficiency

How is Total Productive Maintenance implemented?

Total Productive Maintenance includes three main components:

 Preventative maintenance. These included planned maintenance activities that are

regularly scheduled. The crew will perform these periodically throughout the year. It
includes checking all equipment for problems and fixing any issues. The goal is to
prevent problems before they occur.
 Corrective maintenance. Managers and crew check equipment and determine whether
problematic equipment needs to be replaced altogether. Oftentimes, it is more cost-
effective to replace equipment before they break. Replacing equipment can often increase
efficiency and profits.
 Maintenance prevention. This procedure makes sure that all equipment bought is exactly
what’s needed. Buying faulty or incorrect equipment can result in increased maintenance
responsibilities and production inefficiencies down the line.

19. Total Quality Management

What is Total Quality Management?

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Total Quality Management is an organizational effort to improve the quality of a manufactured
product. The goal is to increase quality of every single step in an organizational workflow.

What are the origins of Total Quality Management? Total Quality Management was first
implemented in 1923 by Walter Shewhard while he was working at Bell Telephone Laboratories.
It was later used by Japanese Manufacturers and implemented on a mass scale in the 1980s.

What are the principles of Total Quality Management?

There are a few main principles of Total Quality Management:

 Focus on the customer. The goal of Total Quality Management is to improve the product
offered to customers and therefore keep customers satisfied.
 Strategy. Total Quality Management requires a strategic approach that utilizes a set
methodology.
 Continuous improvement. Ensuring quality takes time and it must be analyzed and
improved annually.

20. Root Cause Analysis

What is Root Cause Analysis?

Root Cause Analysis is a lean problem solving method that aims to get to the root of a problem.
The philosophy of RCA is predicated on the idea that it’s best to treat the root cause of a
problem, not the obvious symptoms. By treating the root cause, manufacturers can eliminate
larger problems down the road. Still, Root Cause Analysis will generally not fix problems in one
try and is generally an iterative process.
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What are the main principles of Root Cause Analysis?

The main principles of Root Cause Analysis include:

 The aim of Root Cause Analysis is to identify the root cause of a problem in order to
prevent it from ever occurring again. It’s a long term solution.
 Root Cause Analysis must be an investigative and systematic process to work effectively.
 Every problem only has one root cause.

21. Value Stream Mapping

What is Value Stream Mapping?

Value Stream Mapping is a lean tool that uses a flow diagram to depict every step of a process.

What is Value Stream Mapping used for?

Value Stream Mapping serves three main purposes:

 Identify waste.
 Reduce manufacturing time.
 Make entire manufacturing process more efficient.

What is Value Stream Mapping applicable to? Value Stream Mapping can be applicable in
almost any industry, but it is primarily used for: logistics, supply chain, product development,
and administrative processes.

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What data should be collected to create a Value Stream Mapping? Some data points to
collect for Value Stream Mapping include:

 Inventory.
 Number of operators.
 Number of shifts worked.
 Batch size.
 Time it takes to make one product.
 Time it takes to switch from one product to the next.
 How much time factory can run.

22. Continuous Flow

What is Continuous Flow?

Continuous Flow is the opposite of batch production and is closely associated with Kanban and
Just-in-Time. The goal of Continuous Flow is to use ongoing examination and improvement to
integrate all elements of production. By aiming for a Continuous Flow production process, waste
and other problems come to the surface and can then be solved. Ultimately, many lean principles
and tools center around creating a Continuous Flow production process.

The Continuous Flow process generally involves a factory running 24/7 without interruption and
with little waste. Areas like oil refining, metal smelting, and natural gas processing are ideal for
the Continuous Flow process.

What are the benefits of Continuous Flow?

The benefits of Continuous Flow include:

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  Stability.
 Continuity.
 Waste-less process.
 No time wasted.

23. Lean Audit

What is a Lean Audit?

A Lean Audit is a tool used to determine how well lean manufacturing principles are working in
a factory or company.

How is a Lean Audit implemented?

A Lean Audit generally has 5 steps:

1. Identify the objective of your audit. This involves determining what lean processes you
are already using and coming up with metrics to decide how well they are working. The
goal of a lean audit should be to improve overall efficiency, reduce waste, and lower
production costs.
2. Determine who will conduct the audit. Lean Audits are best performed by a third party
team in order to ensure objectivity, however, senior management may choose to conduct
the audit internally.
3. Create a point system to measure progress.
4. Use a system to perform the audit. Ideally, a Lean Audit will be performed using lean
principles.
5. Follow up with the audit to ensure that all problems get fixed. Ideally, Lean Audits
should be performed on a small-scale monthly and on a large-scale yearly.

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24. Quick Changeover

What is Quick Changeover?

Changeover is the amount of time it takes to change a piece of equipment between the
production of one item to the next. In Lean, the goal is to ensure a Quick Changeover.

An example of Quick Changeover?

A pit-crew at a car race is a great example of Quick Changeover. The quicker a crew can a
changeover, the better chance a racer has of winning. A slow changeover will often result in
losing a race.

What are the benefits of Quick Changeover?

The main benefits of Quick Changeover are:

 Reduce amount of defects.

 Reduce inventory costs.
 More production flexibility.
 Better chance of on-time delivery.

25. Right First Time

What is Right First Time?

Right First Time is a lean philosophy that stresses getting processes right the first time, every
time. The concept involves planning and a deep understanding of manufacturing processes.

How is Right First Time implemented?

Right First Time has 3 primary steps:

1. Track performance. The first step of Right First Time is figuring out how often you’re
getting your manufacturing processes right the first time. Search for areas in the
manufacturing process where things do not go smoothly the first time around. By
identifying the problems, you can figure out where your manufacturing processes need
work.
2. Improve performance with a systematic process. Often, the biggest problem
manufacturers have is human error. The more systematic a process becomes, the more
likely you can get things right the first time.
3. Identify areas of waste and use the Right First Time tool to cut them out. Main areas to
focus on include inventory, overproduction, defects, and transportation.

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26. 7 Wastes

What is 7 Wastes?

In lean manufacturing, 7 Wastes refers to seven typical places manufacturers have waste. Using
the 7 Wastes tool, manufacturers can determine where they have waste and can improve their
processes in each area. The method was invested by Toyota and is an integral part of the Toyota
production system.

What are the 7 Wastes?

The 7 Wastes are as follows:

1. Overproduction. Overproduction refers to producing a product before it is needed. In the

Toyota production system, products are produced only when there is customer demand.
2. Waiting. Waiting refers to the time between one operation and the next.
3. Transporting. Transportation adds no value to a product and only too much transporting
only increases the risk of defects.
4. Inappropriate processing. This refers to using overly expensive equipment to accomplish
tasks that can be processed by simpler and most cost-effective equipment.
5. Unnecessary inventory. The goal is to reduce inventory to what’s needed.
6. Excessive motion. Human motion should be reduced in the manufacturing process.
7. Defects. Reducing defects is crucial for reducing costs.

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27. Six Big Losses

What is Six Big Losses?

Six Big Losses refers to the six most common reasons for ineffective production. TPM and OEE
are generally used to eliminate the Six Big Losses.

What are the Six Big Losses?

1. Breakdowns. Breakdowns refer to machine failure and the need for intensive
maintenance.
2. Setup/Adjustment. Setup/Adjustment refers changeover and machine warm-up.
3. Idling. Idling refers to jams, obstructions, and cleaning.
4. Speed. Speed refers to operator efficiency and machine wear down.
5. Defects in process and rework. Defects refer to product damages and the need for
corrections.
6. Start up losses. Start up losses refer to improper assembly and losses due to product
defects.

28. SMART Goals

What is SMART Goals?

SMART Goals is a method to set goals in a productive manner. In order to effectively use lean
manufacturing methods, management must set proper goals strive for. Ideally, those goals should
be clearly defined and communicated.

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What does SMART stand for? In order for a goal to be achieved it should be:

 Specific. A goal should be concrete and based on actual facts and figures.
 Measureable. Results must be quantified with clear numbers.
 Attainable. Goals should be attainable and not too ambitious. Impossible goals hurt
employee morale.
 Realistic. Similar to attainable, goals must be set in a realistic way based on available
resources and time.
 Time based. Goals must be given a due date that is realistic based on available resources.

29. KPIs

What are KPIs?

KPI is an acronym for Key Performance Metric and it refers to metrics used to assess and
analyze manufacturing efficiency. KPIs are essentially metrics set by management in order to
measure the success of lean manufacturing goals.

What are some common manufacturing KPIs?

Some common manufacturing KPIs include:

 Speed. Measuring speed is essential for increasing efficiency and profits.

 Count. This refers to the amount of product produced.

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  Reject ratio. Manufacturing processes will sometimes produce scrap. Reducing scrap is
essential for increasing productivity.

 Takt time. This can refer to the amount of time it takes to produce a product or the
amount of time it takes for one specific operation. Measuring this can help identify where
there are bottlenecks or constraints in the manufacturing process.
 Downtime. Breakdown or machine changeover often cause downtime. Lean seeks to
reduce downtime as much as possible.

30. The 5S Method

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What is The 5S Method?

The 5S Method refers to five Japanese and English terms that begin with an “S” and provide a
workplace organization method.

What does each “S” stand for?

 Sort (Seiri): Decide which items in a factory are necessary and which ones are not. Get
rid of the ones that are not.
 Straighten (Seiton): Make sure every item in a factory is in the right place. Items should
be easy to find and access.
 Shine (Seiso): Clean factory regularly. By getting rid of dirt, garbage, etc. you can more
easily identify problems in the manufacturing process.
 Standardize (seiketsu): Create standards to ensure a clean and neat factory floor.
 Sustain (shitsuke): Create habits that ensure standards are met over the long term. Set
responsibilities for managers and operators to ensure that habits are set.

31. SMED

What is SMED?

SMED stands for Single-Minute Exchange or Die. The goal of SMED is to get all changeovers
and startups down to 10 minutes. Each step should be one minute or less. By reducing setup
time, factories can greatly improve efficiency. SMED as invented by Frederick Taylor in 1911
and was later used by Ford Motors in 1915.

What are the main principles of SMED?

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  Identify all changeover tasks.
 Analyze each task to determine purpose.
 Determine low cost solutions.
 Goal should be to reduce changeover time.

What are the steps to implement SMED? The steps to perform SMED are as follows:

1. Separate internal from external setup operations

2. Convert internal to external setup
3. Standardize functions
4. Use functional clamps or eliminate fasteners altogether
5. Use intermediate jigs
6. Adopt parallel operations
7. Eliminate adjustments
8. Mechanization

32. A3 Problem Solving

What is A3 Problem Solving?

A3 Problem Solving is a problem solving method that uses a structured, continued growth
methodology to improve manufacturing practices. The method was invented by Toyota and is
based on the work of Edward Deming.

How is A3 Problem Solving implemented?

A3 Problem Solving has 7 steps:

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 1. Determine what is the company generally trying to fix.
2. Analyze the current situation. What is currently being done?
3. Decide what the company’s goals are. What specifically will be accomplished?
4. Determine what the gap is between current processes and where the company wants to
be.
5. Come up with possible solutions and determine what the barriers will be.
6. Decide on a plan. What will the new process look like?
7. Follow up. Track results and figure out what’s working.

33. PDCA

What is PDCA?

PDCA stands for Plan-Do-Check-Act and is a four-step method for creating and carrying out
change. The PDCA method is a cycle and is repeated over and over again in order to drive
continuous improvement.

When is PDCA used?

PDCA is primarily used when:

 Conducting an improvement project.

 Designing a repetitive work process.
 Developing a new process or product design.
 Implementing changes in the manufacturing process.

What are the PDCA steps?

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PDCA steps include:

1. Plan. Find an area that needs improvement and plan a change.

2. Do. Test the change on a small-scale.
3. Check. Check how the test went by analyzing the results and determining what you’ve
learned.
4. Act. Take action based on what you’ve learned. If the change you made did not work,
start from the beginning and determine a different test. Use your failures to determine
where you will go next.

34. Standardized Work

What is Standardized Work?

Standardized Work is a tool used to document current best practices, improve the standard, and
ensure that the new standard becomes a baseline for improvement.

What does Standardized Work improve?

Standardized Work improves 3 important aspects of the manufacturing process:

 The rate at which products are produced in order to meet customer demand.
 The operator’s work sequence to produce products at that time rate.
 The standard inventory needed to ensure a smooth manufacturing process.

What are the benefits of Standardized Work? The main benefits of Standardized Work
include:

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  Better documentation of current processes.
 Easier training for operators.
 Few injuries and strains.
 Baseline to make improvements.
 Reduces variability.
 Adds discipline to a work culture.
 Promotes problem solving.
 Increases teamwork across organization.

35. 5 Whys

What is 5 Whys?

5 Whys is a lean method used to determine the root cause of a problem. Managers repeat the
question “Why?” and each answer forms a basis for the next question. This process continues
until a conclusion is reached. The 5 Whys technique was developed by Sakichi Toyoda and has
been used by Toyota to improve its manufacturing processes. The 5 Whys technique generally
requires persistence and determination for it to work effectively.

What are the rules surrounding 5 Whys?

In order to properly perform 5 Whys, managers should follow a variety of rules:

 Use paper or a whiteboard, not a laptop or computer.

 Clearly define the problem and make sure every team member understands it.
 Use a step by step process to find the root cause. Avoid jumping to conclusions.
 Identify what the causes are, not the symptoms.
 Use logic, not emotion.

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  Focus on making sure answers are as precise as possible.
 Use customer’s point of view when answer the “Why” questions.
 Facts and knowledge should be the basis for each answer.

What Is Value in Lean?

The core objective of Lean is creating more value for customers while optimizing resources. It
sounds simple, but it is truly effective.

Companies widely recognize that to achieve and sustain a competitive advantage, they must
become more customer-focused. This is why many organizations turn to Lean.

Lean thinking begins with one simple thing: identifying value. This will help you understand
what your customers are ready to pay for.

Respectively, your organization will be able to build a value stream where you can identify
wasteful activities and remove them from your workflow. By doing so, you will be able to
deliver the value that customers expect and optimize profitability.

The Customer Defines Value in Lean

Lean management is a philosophy that has gained massive popularity in various industries
because of its positive impact on any company’s overall performance. It supports organizations
in many aspects like reducing costs, optimizing processes, improving quality, etc. However,
what really makes Lean effective is the focus on value.

What is Value in Lean?

In terms of Lean, the value should always be considered from a customer perspective. At the end
of the day, it doesn’t matter whether you came up with a great idea if the customer doesn’t see
any value, and therefore she is not ready to pay for it.

It is important to remember that customers enjoy value in its entirety but not delivered piece by
piece. It is tricky, but you may end up with a bunch of unhappy customers and low brand equity
if you ignore this.

Here is an example. Imagine that you buy a laptop. You had your laptop delivered, and when you
try to run it, you realize that the machine is without an operating system. So now you need to buy
the operating system and install it.

Let’s assume you don’t have the knowledge to do this. It means you have to find a specialist who
can make your laptop actually run.

Both things will cost you money and time. In the end, you will have a working laptop after a
week (if you are lucky), and you will probably never buy a device from this company again.

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This example can give you a different perspective on value. You didn’t just need a laptop. You
needed a laptop that you can use immediately to do some work, play video games, play some
music, and so on.

In the end, value is what customers really want, along with the price they are willing to pay.
When you figure this out, you can start mapping the work process and focus on recognizing
value-adding activities and wasteful ones.

After this, do whatever you need to maximize the first and minimize the last so you can meet
your customer’s expectations.

Now let’s dive deeper and further explore the value-adding system in the world of Lean
management.

Identify Waste Activities and Where Value is Added

When you have your processes mapped, you will recognize which activities add value to the end
product and which ones do not.

Basically, value-adding activities contribute to the transition of a product from its raw to a
completed state in the least possible time, at a minimum cost. For one activity to be considered
as value-adding, it needs to meet the following three criteria:

1. It moves the product downstream and helps it get one step closer to completion.
2. It is an activity that the customer would actually be willing to pay for.
3. The activity needs to be done right the first time. In other words, it does not require any rework,
and neither you nor the customer should spend additional resources to make it better.

On the other hand, non-value-added activities affect organizational efficiency by delaying the
product delivery process. They place a burden on the organization, and therefore customers
would not be willing to pay for them. The non-value adding activities fail to meet the criteria
from above and are generalized as waste.

Taiichi Ohno, who is considered the main architect of the Toyota Production System, devoted his
career to eliminating waste (Muda) from production processes.

He probably realized this is the right way to generate value for the customer. Ohno was able to
identify various activities in different work processes, which can be removed.

Respectively, their removal could improve the overall economic performance of the company.
His dedication let him identify and describe the seven types of waste:

 Transport
 Inventory
 Motion
 Waiting
 Overproduction

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  Over-processing
 Defects

You can easily remember them as TIMWOOD.

In the following table, you can better understand how these seven types of waste can be
visualized and applied to the production processes in manufacturing, software development, and
marketing.

Waste Production Software Development Marketing

Moving parts and

Task switching, Task switching, interruptions,
Transport materials from one place
interruptions unnecessary long marketing funnel
to another

Undelivered products or Undelivered code. Fully-prepared marketing campaigns

Inventory
parts Undelivered features which stay untouched

Unnecessary meetings, Unnecessary meetings, extra effort to

Unnecessary movement
Motion extra effort to find find information, attending events
of the worker
information without clear agenda

Waiting (often related to lack of

Waiting Waiting Waiting
hierarchical flexibility)

Performing many different marketing

Overproduction Too many parts Features nobody uses activities without having a clear vision
and strategy

Unnecessary complex Generating countless marketing

Over- Spending a lot of time
algorithms solving simple reports manually, while they can be
processing on a given task
problems automated

Defects Broken parts Bugs Wrong brand Communication

This is just a sample of what waste activities may be in different areas. Companies know their
processes at best, so better sit down and examine your own workflow.

However, it is also important to differentiate necessary waste from pure waste. For example,
testing software is a non-value adding activity, but it is literally impossible to produce software
without testing (at least if you don’t want to bankrupt really fast).

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Imagine that you have to buy a self-driven car whose software was never tested. You will
probably prefer to cycle or walk.

So, keep in mind the following list of activities you can have in terms of Lean:

 Pure waste – any activity that doesn’t bring value and damages efficiency. Usually, waiting is the
most common type of pure waste.
 Necessary waste – activities that our customers have no interest in paying for, but they are
required to maximize the end product's value. Such activities can be testing, planning, etc.
 Value – the definition of value in lean is everything the customer is willing to pay for.

If you take a look around, you will probably notice many waste activities in your work processes.
Lots of meetings where no decisions are made, a bunch of customer requests (complaints)
waiting on your manager’s approval, and so on.

At the end of the day, customers don’t care about your waste activities. The only thing they care
about is what value you can offer them. So, you better inspect your work processes and try to
eliminate waste at maximum.

However, sometimes even customers cannot define the value in its entirety. In these cases, the
most progressive ones succeed in standing out from the crowd and adding value that nobody has
seen before.

Because sometimes, people do not know if they need something until they see it. Just remember
that no one ever knew what a PC or smartphone is.

Lean Tools for Identifying Value and Waste

There are many different tools you can use to improve your work processes. Each of them can
help you identify value-added activities as well as to detect waste.

5 whys – a simple technique for solving problems. It can help you find the root cause of any
problem and identify good opportunities for improvements.

A3 problem-solving – a model that also supports you in finding root causes in your workflow. It
encourages collaboration and cross-organizational knowledge sharing that often helps you
identify value-adding activities or wasteful ones.

Gemba walks – a technique that allows higher management to go and see where the real work
happens. An excellent opportunity to build stable relationships with those who do the actual
work and see where value is created.

In Summary

Lean thinking starts with value. It enables you to understand what customers are ready to pay for,
so your company can:

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  Identify value-adding and non-value adding activities.
 Detect and eliminate pure waste and necessary waste activities.
 Focus on optimizing processes and profitability.

7 Wastes of Lean

The 7 forms of waste is a concept that is an integral part of Lean management. Learn what costs
you money and resources as well as how to eliminate waste from your work processes.

Eliminating wasteful activities is one of the most important prerequisites for building a
successful company. This concept is an integral part of Lean thinking, and it helps you increase
profitability.

The idea of eliminating waste originates from the Toyota Production System. Taiichi Ohno, who
is considered one of the founding fathers of lean manufacturing, dedicated his career to
establishing a solid and efficient work process.

During his journey, Ohno described three major roadblocks that can influence a company’s work
processes negatively: Muda (wasteful activities), Muri (overburden), and Mura (unevenness).

Based on his observations and deep analysis, he categorized the 7 types of waste (7 Mudas),
which later became a popular practice for cost reduction and optimizing resources.

What Is Muda (Lean Waste)?

Waste in Lean is any activity that consumes resources but brings no value to the end customer.

In reality, the activities that indeed create value for the customers are only a small portion of the
whole work process. This is why businesses should focus on reducing wasteful activities as

36
much as possible. By doing so, companies can identify significant opportunities to improve their
overall performance.

Don’t make a mistake. Not all wasteful activities can be eliminated from your work process.
Some of them are a necessity.

For example, testing software is not an activity that your customers are willing to pay for.
However, without it, you may deliver a low-quality product that will harm your economic
performance. Therefore, there are two major types of waste:

Necessary waste – non-value-adding, but necessary to get things done in a quality manner. Such
activities can be testing, planning, reporting, etc.

Pure waste – non-value-adding and unnecessary. Anything that doesn’t bring value and can be
removed from the process immediately. Any form of waiting (known as "waiting waste") can be
described as pure waste.

After we clarified what waste is in Lean, let’s explore the seven wastes in detail.

The 7 Wastes of Lean

Optimizing processes to eliminate waste is crucial for the success of your company. Having
wasteful activities can lower profitability, increase customer costs, decrease quality, and even
employee satisfaction. For this reason, you need to identify the non-value adding activities and
try to improve the process where they appear or ultimately eliminate them.

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The Lean theory describes 7 major areas where you can identify Muda activities, more popular
as the seven wastes of Lean.

1. Transportation

This type of waste is when you move resources (materials), and the movement doesn’t add value
to the product. Excessive movement of materials can be costly to your business and cause
damage to quality. Often, transportation may force you to pay additionally for time, space, and
machinery.

2. Inventory

Excessive inventory is often the result of a company holding “just in case” inventories. In such
cases, companies overstock themselves in order to meet unexpected demand, protect from
production delays, low quality, or other problems. However, these excessive inventories often
don’t meet customer’s needs and don’t add value. They only increase storage and depreciation
costs

3. Motion

This kind of waste includes movements of employees (or machinery), which are complicated and
unnecessary. They can cause injuries, extended production time, and more. In other words, do
whatever is necessary to arrange a process where workers need to do as little as possible to finish
their job.

4. Waiting

This is probably the easiest waste you can recognize. Whenever goods or tasks are not moving,
the "waiting waste" occurs. It is easily identifiable because lost time is the most obvious thing
you can detect. For example, goods waiting to be delivered, equipment waiting to be fixed, or a
document waiting for executives' approval.

5. Overproduction

Keeping in mind that waste is anything that the customer is unwilling to pay for, it is easy to
realize why overproduction is Muda. Producing more means that you exceed customer’s
demand, which leads to additional costs. Actually, overproduction triggers the other 6 wastes to
appear. The reason is that excess products or tasks require additional transportation, excessive
motion, greater waiting time, and so on. Furthermore, if occasionally a defect appears during
overproduction, it means your team will need to rework more units.

6. Over-processing

This type of waste usually reflects on doing work that doesn’t bring additional value, or it brings
more value than required. Such things can be adding extra features to a given product that
nobody will use, but they increase your business costs. For example, if a car manufacturer
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decides to put a TV screen in the back trunk of a vehicle, probably nobody will use it or find
value in it. Even more, it will cost resources, and it will increase the end price of the product for
something that customers are not willing to pay for.

7. Defects

Defects can cause rework, or even worse, they can lead to scrap. Usually, defective work should
go back to production again, which costs valuable time. Moreover, in some cases, an extra
reworking area is required, which comes with additional exploitation of labor and tools.

As you can see, the 7 types of waste are toxic to your business. However, you can see them more
as an opportunity to improve work processes and, most importantly, optimize resources. For
different businesses, the 7 forms of waste may have different aspects.

So let’s explore some real-life examples of the 7 types of waste.

The 7 Types of Waste in Different Environments

Identifying wasteful activities is something that should start from the top of the company.
Usually, high-level management has a broad overview of all processes. In this line of thought,
we can say they manage a portfolio of different activities, functional areas, and projects, and it is
their obligation to improve processes and spread a culture of continuous improvement.

However, wasteful activities may vary from business to business. In the following examples, you
will see how particular types of waste may differ in various functional areas.

7 Wastes of Lean Manufacturing

 Transportation – in production, it may mean moving parts and materials from one place to
another
 Inventory – undelivered products or parts. Overstocking with equipment that may be in need
somewhere in the future
 Motion – unnecessary movement of employees or machinery
 Waiting – waiting for goods to be delivered
 Overproduction – too many items produced “just in case”
 Over-processing – Spending a lot of time on a given task. Adding a feature that doesn’t bring
value
 Defects – broken parts or defective parts that need to be reworked

7 Wastes in Software Development

 Transportation – switching between tasks too often, countless interruptions from colleagues.
 Inventory – undelivered code or undelivered features
 Motion – unnecessary meetings or extra effort to find information
 Waiting – waiting for testing to complete, waiting for code review, and so on
 Overproduction – producing features that nobody is going to use
 Over-processing – unnecessary complex algorithms solving simple problems

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  Defects – bugs

7 Wastes in Marketing
 Transportation – task switching, interruptions, unnecessary long marketing funnel
 Inventory – fully-prepared marketing campaigns which stay unlaunched. Licensed tools that
nobody uses
 Motion – unnecessary meetings, extra effort to find information, attending events without clear
agenda
 Waiting – waiting for approval from higher management
 Overproduction – performing many different marketing activities without having a clear vision
and strategy
 Over-processing – generating countless marketing reports manually, while they can be
automated
 Defects – wrong brand communication, mistakenly branded materials

7 Wastes in Project Management

 Transportation – task switching, interruptions, unnecessary long marketing funnel
 Inventory – purchased online tools that teams rarely use, office supplies that exceed needs.
 Motion – badly structured workspaces and lack of organizational paths, too many meetings, extra
effort to find information, and so on
 Waiting – waiting for approval from higher management
 Overproduction -filling unnecessary great amount of documents
 Over-processing – multiple levels of approval for small tasks
 Defects – an incorrect collection of data

This is a never-ending list, and the 7 wastes of Lean will differ from business to business. In
some theories, you can even find more types of Muda added to the initial seven. The important
aspect is to start exploring all your company processes and try to find as many wasteful activities
as possible. Afterward, do whatever it takes to eliminate everything that can slow down your
cycle time, damage quality, cost additional resources, or decrease profitability.

Tools You Can Use to Tackle the 7 Forms of Waste

There are different tools in Lean you can use to identify and eliminate wasteful activities. They
will guide you through the work process you want to examine and show you the weak spots.

Probably, the most appropriate tool for identifying Muda is the Gemba walk. It is a technique
that allows you to go and see where the real work happens. This way, you can observe different
processes in action and see where wasteful activities appear.

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Example of the A3 report

Other tools you can use are the 5 whys and the A3 report. Initially, both tools are used for root
cause analysis and problem-solving. However, they are more than useful when you need to
detect waste. The first one is a simple method that includes a sequence of “why” questions, while
the second is a bit more complicated process that encourages cross-organizational knowledge
sharing. Both will help you examine any big or small process and find where you can reduce or
completely eliminate waste.

What Is Mura and Why You Need to Remove it?

Mura is the waste of unevenness. The chaotic and unpredictable work process is expensive.
Learn how to identify and remove the root of it.

Lean is all about delivering more value to the customer. To keep your clients happy, you need to
establish a stable pace of delivering that value.

A common mistake that novice lean managers make is focusing strictly on getting rid of the
Muda (aka the 7 wastes of Lean).

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However, they have trouble understanding that failing to maintain a steady work rhythm is
causing many other process wastes.

Unevenness is a major waste on its own in Lean. Known as Mura, it can disrupt a company’s
workflow even on a global level if left unattended.

What is Mura?

Mura is the waste of unevenness or inconsistency. Depending on your context, it can have more
than one manifestation.

Mura is the conjunction of overburdening some resources while others wait or alternating over
time between overburdening and underutilizing the same resources.

A typical prerequisite for unevenness is the inability to smooth out your process and create a
balanced Takt. As a result, your team tries to process as fast as possible, one large batch after
another, with little thought of how your process will handle the burden.

Consequently, your process becomes less predictable, and you struggle to deliver value at a
steady pace.

The Hockey Stick Effect

A clear example of unevenness in the work process is the Hockey Stick Effect.

It is a common sight within teams of any kind (e.g., marketing, development, QA, etc.) trying to
hit some sort of a goal.

For example, a software development team practicing Scrum plans to release 10 new features
within their next sprint, which is, let’s say 4 weeks long. They fill the backlog and start
processing task after task.

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Knowing that they’ve got plenty of time ahead, at first, they start working casually, picking up
the pace as days roll by. By the beginning of the last week, the team realizes that they are falling
behind schedule.

As a result, in the next few days, each member puts in an extra effort and at the cost of hours
overtime and a lot of stress, they manage to finish the sprint successfully (in the best case
scenario).

Due to the fatigue they’ve accumulated during the fourth week, they start slowly again at the
beginning of the next sprint, and the cycle repeats.

The hockey stick effect can cause Mura in every context with no regulated limits to the amount of
work that can be in progress simultaneously.

Identifying Mura
There are two major ways to identify unevenness in your process by applying Lean:

 Visualizing your workflow on a Kanban board.

 Measuring your process stability with a cumulative flow diagram.

Shining a light on the workflow with Kanban

Visualizing your workflow is a logical first step for spotting unevenness in your process. The
main tool in Lean for that purpose is the Kanban method.

It allows you to map your workflow on a board divided by columns representing each step in
your process. The more detailed you build it, the more comprehensive understanding you’ll have
of the amount of Mura you’ve got in your process.

As every task your team works on is hosted on a Kanban card, you can clearly see how much
work is in progress and where it gets stuck. As a result, you’ll be able to identify problematic
areas and take action to deal with the unevenness.

The most powerful weapon in the Kanban arsenal for dealing with Mura is the ability to put
limits on the amount of work in progress both globally and for any particular stage of your
workflow. This way, you can ensure a steady flow of assignments and prevent unevenness.

However, placing the proper WIP limits is a tricky task, and just looking at your Kanban board
may not give you the answer.

Cumulative flow diagram for optimal process stability

The best way to gain a comprehensive understanding of the stability of your process is to draw a
cumulative flow diagram.

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Cumulative flow diagram

Each band on the diagram is a representation of a stage in your workflow. As the bands progress
over time, you need to monitor their width. If all bands on your cumulative flow diagram (except
for the bottom one) are progressing in parallel, then your progress is stable, and you don’t have
notable problems with Mura.

However, if the distance between the stages varies, then you’ve got work to do. Wider bands
represent stages where work arrives faster than your team can process it, and therefore these
steps of your process become bottlenecks.

With that information at hand, you can come to an actionable conclusion where you need to
place additional WIP limits to keep your process running all the time or increase capacity to
alleviate a bottleneck.

Dealing with Mura on a team level is the easier part. However, when your whole organization
has a problem with unevenness, things get more complicated.

Portfolio Kanban for Dealing with Mura on the Company Level

For many leaders, dealing with unevenness on a team level is enough to get rid of Mura.

However, establishing stable takts in your departments is not a guarantee that your company
process will become steadier. Although the teams will work more efficiently, they may easily
become bottlenecks to one another.

For example, let’s say that your development team has X capacity and a steady workflow. Your
QA team has Y capacity that is < X and has no problem with Mura. The developers will push

44
more work than the quality officers can process, and although both teams are efficient on their
own, your overall development process will remain uneven.

This can be a serious challenge if you can’t connect the different levels of your company process
together into a single picture. The answer lies in the Portfolio Kanban method, a lesser-known
approach to Kanban developed especially for global implementation.

Portfolio Kanban Work Breakdown

With its help, you can create multiple layers of Kanban boards connected to each other. As a
result, when breaking down company-wide (or anything larger than team tasks, to be precise)
initiatives, you can have a clear look at the evenness of your process.

In Summary

What Is Muri and How to Deal with It?

Muri is a key concept in Lean management. It stands for "overburdening". Find out what can
cause Muri and how to deal with it.

One of Lean management's main purposes is to eliminate wasteful activities in the production
process and optimize resources.

Surprisingly, many lean practitioners go straight to tackling the 7 wastes, known as Muda, while
forgetting the other two M’s that are crucial for maintaining a smooth and well-organized
workflow: Mura and Muri.

In reality, identifying and removing Mura (unevenness) is extremely important if you want to
create a steady work pace. However, at first, you need to identify the steps of your process that
overburden the organization's work system.

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In other words, you need to spot Muri. After this, you will be able to analyze and optimize the
work capacity of your workforce.

Let’s explore what Muri is in detail.

What is Muri?

Muri is a Japanese term meaning “overburden or unreasonable”. It is one of the three types of
waste (Muda, Mura, Muri) and a key concept in the Toyota Production System.

In other words, you create Muri whenever you put your team under stress by demanding
unreasonable or unnecessary work that exceeds their capacity.

Muri can drastically decrease your team’s productivity and efficiency. Putting too much pressure
often translates to extra working hours, which will lead to occupational burnout.

Overburdening can hurt your team’s morale and damage the “health” of the whole work process.

It is like in a football team: if you only put the whole pressure on 3 players because they are
outstanding, at some point, they will get injured, and then the whole team will struggle. So you
need to be careful while trying to use the full capacity of your team.

You should try to balance at the optimal capacity – a level at which all parts of the system can
deliver results without the need for extra work.

It is easy to say, but let’s discover what can cause Muri.

What Can Cause Muri?

You can overburden your teams without even realizing it. For example, setting unrealistic
deadlines can force different team members to rush the work. This will often lead to poor quality
and decreased customer satisfaction.

Let’s demonstrate this with an example.

If you tell your designer to make twice more images that she is able to produce for a certain
period of time, she will probably do it, but not all of them will be of the highest quality.

More or less, it is like an assembly line. Imagine you have the workers who check the quality of
products, and the faster you run the assembly line, the higher the chance low-quality products
will go to your customers.

There are many different reasons that can cause Muri.

Over-demanding

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The first and more obvious is over-demanding. In the contemporary business world, it is quite
surprising how higher management pushes more work onto their teams, hoping that more inputs
will result in more outputs.

In fact, this leads to a constantly increasing number of waiting tasks, which often results in chaos
and burnouts.

Lack of training

Companies often neglect the need for good training sessions. This is how, at some point, a team
member can end up working on a task much longer than necessary.

Let’s say that you are trained to work as a copywriter. However, the manager decides to use you
as a designer. You will probably need twice more time to deliver good images than a regular
designer will.

Lack of communication

Good communication is crucial for the success of any team. You need to establish clear
communication channels and practices to avoid overburdening.

Imagine that you have a meeting with 3 of your team members, and you decide to make 10 new
landing pages for your website.

Everybody in the meeting agrees and the team starts to work on the project. However, it was just
a verbal agreement, and the designer was not informed of the project until the last day before the
expected deadline.

Respectively, the designer will be overburdened, and she/he will feel the negative effect of Muri
because of miscommunication.

Lack of proper tools and equipment

When proper tools are missing, Muri is inevitable and obvious. If you give new computers to
some of your developers, for example, but the rest work on 5 years old machines, the second
group will definitely feel overburdened because they will need much more time to complete their
tasks using their old equipment.

There could be many other reasons causing Muri. You need to remember that managing all of
them will prevent the whole work process from collapsing.

Now, let’s see how you can deal with Muri.

Different Ways to Deal with Muri

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Lean offers various tools and practices that may help you remove the negative effect of
overburdening or reduce it to a minimum level.

Map your team’s workflow

First, let start by mapping your team’s workflow. For this purpose, you can use a Kanban board
where you visualize the different stages of the workflow. By doing so, you will be able to
acquire a clear understanding of your team’s capacity and see where value is created.

After this, you can set work in progress limits for each stage of the workflow. This way, you will
ensure that different team members will not work chaotically on multiple tasks, but they will be
focused on completing current tasks before starting new ones.

Simply, the application of WIP limits creates from Kanban an efficient pull system that will help
you organize work better and prevent team members from overburdening.

It gets a little bit more complicated on a global level. Very often, there are two or more teams
whose work is inter-dependable.

For example, let’s say that we have team A – developing new features for your software service
and team B – deploying these features.

However, team A delivers new features faster than team B deploys. In this case, team B will
always have a huge queue of requested work, and their workflow will be overburdened all the
time.

Therefore, it is important to set WIP limits on a global level. So whenever team A starts working
on a new feature, they need to be sure that team B has free capacity.

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Yes, team A can get blocked for a while, but they can redirect some of their capacity to help
team B instead of overburdening them. In the business world, it is better to have one of your
teams blocked than all your company stacked.

Standardize your process

Another way of dealing with Muri is standardization. Having all processes documented and team
members well trained will ensure that everyone can do the right work in the best way.

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Standard procedures will support good communication, and it will help your teams avoid
misconceptions.

Practice Jidoka

One more Lean management tool that can help you deal with Muri is Jidoka. It is a simple
practice that allows any team member to stop the work process if a problem occurs. Then the
team needs to solve the problem before the work process continues. This way, you create built-in
quality standards and avoid rework.

Additionally, you can do Gemba walks periodically, which is a simple “go and see” method that
will help you have a clear understanding of what is actually happening and where Muri occurs.

In Summary

Many companies overburden their employees without even realizing it. This is what the Japanese
call Muri. Overburdening inevitably leads to inefficiency, which can cost you valuable resources
and a lack of good results in a matter of profitability. To tackle Muri:

 Train your teams properly and provide them with good tools and equipment.
 Create clear communication channels and practices.
 Create standardized procedures.

What is 5S?

The 5S is a lean method and one of the foundations of Kaizen. It consists of 5 consecutive steps
that allow any team to organize their workplace for maximum process efficiency.

It’s often overlooked that improving the small things around you can greatly impact the large
aspects of your work process. Thankfully, the 5S method can help you make your workplace a
sanctuary of productivity.

It will allow your team to work with more discipline and apply every tool in the Lean arsenal
with less effort. Stick to the end to understand why.

What is 5s & How Is It Linked to Lean?

The 5S is a lean method for workspace optimization and one of the foundations of Kaizen. It
consists of 5 consecutive steps that allow any team to organize their workplace for maximum
process efficiency. 5S stands for:

Sort (Seiri)

Separate required tools, materials, and instructions from those that are not needed. Remove
everything that is not necessary from the work area.

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Set in order (Seiton)

Sort and organize all tools, equipment, files, data, material, and resources for quick, easy
location, and use. Label all storage locations, tools, and equipment.

Shine (Seiso)

Set standards for cleanliness. Clean and remove all trash, grease, and dirt. Cleanliness provides a
safe workplace and makes potential problems noticeable (e.g., equipment leaks, loose parts,
loose paper work, or materials).

Standardize (Seiketsu)

Engage the workforce to systematically perform steps 1, 2, and 3 above daily to maintain the
workplace in perfect condition as a standard process. Establish schedules and set expectations for
adherence.

Sustain (Shitsuke)

Build organizational commitment so that 5S becomes one of your organizational values so that
everyone can turn it into a habit.

Taiichi Ohno and Shigeo Shingo popularised the method as part of the original Toyota
Production System that laid lean manufacturing foundations.

Implementing 5S is among the first steps you should take when implementing Lean.

How Can It Help Businesses Grow?

5S is a great way to minimize the 7 wastes of Lean (also known as Muda).

It recognizes that every tool needs to have a specific place that allows the team to find it quickly,
use it and return it to the same location. Nonetheless, it protects the workplace from getting
cluttered with unnecessary equipment.

Therefore, it is an effective way to reduce the wastes of:

 Motion – by reducing the distance covered to acquire a tool

 Waiting – by minimizing the time wasted waiting for a tool to be acquired
 Inventory – by removing any unnecessary equipment from the workplace

Moreover, 5S is a great way to maintain formidable discipline in your team and increase the
built-in quality of their work.

Who Implemented 5S?

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Although Toyota is the most famous example of a company that has increased the value they
deliver by implementing the 5S, there are plenty of other success stories in western companies as
well.

Boeing

The company has implemented 5S to increase its employees' safety and minimize the chance of
accidents during the manufacturing process.

Boeing has implemented the method in both its manufacturing process and administration. With
the help of 5S, they’ve been able to simplify and increase their entire business efficiency.

Hewlett-Packard

Hewlett-Packard has been using 5S to streamline their daily processes and prevent unnecessary
loss of time by systematically arranging workspace items.

The company has optimized its storage spaces by organizing storage areas similar to supermarket
shelves. This way, employees can find parts quicker and therefore build products with more
efficiency.

Although 5S was originally developed to be applied in? Manufacturing environment, you can
easily adapt it to meet the needs of knowledge-work and project teams as well.

How to Apply 5S in Project Management/Knowledge Work?

When your workplace is an office, and your team does most of their work on a computer, 5S
may seem inapplicable or not worth the effort. However, it is the exact opposite as organizing
knowledge work is much harder than organizing your workspace.

Sorting software tools

Typically, the primary tools your team utilizes in a typical knowledge-work scenario are
software solutions.

You should prepare a form containing every tool you’ve bought and ask each member to
comment on its usage. Ask what the value of each tool is and how often it is used.

After every person has filled the form, get rid of anything that’s no longer useful to anybody. If
there are tools that are rarely used or have questionable value, take them out on a dashboard, or if
you are using Kanban, list them on a kanban board and recheck their status after a while.

This way, you can save both money and virtual space on unnecessary software.

Setting order

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After you’ve organized your software solutions and have kept only those that bring value, try to
scale their effect. Look for platforms that can combine in a single place the value that different
tools provide and have the ability to be integrated with other software solutions.Prepare guides
for each team containing information about each tool, how it should be used, and what the
required logins are.

Setting order is crucial, especially when it comes to documents, as they can be lost easily. If you
are among the majority of companies that rely on cloud storage (e.g., Google Drive, Onedrive),
make sure that your folders are organized and labeled clearly.

This way, everyone will easily find whatever they may be looking for or store documents at an
easily accessible place.

The 5S states that you should be able to find any tool or document in 30 seconds or less.

To make collaboration easier, make sure that the workflow system you use can be integrated
with your drive so your team can share documents quickly and keep all the information about a
task in a single place.

Shine

This step of the 5S is vital for making the most of your tools.

Make sure to keep your software solutions updated and educate yourself and your team on how
to make the most of any new feature that the software provider releases.

Standardize

When most of the work your team does is on a computer screen, it is quite hard to keep a process
running in an efficient way.

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Therefore, you should standardize how each team works and visualize the process so that
everybody understands it. A simple way to do so is to map every step of your workflow on a
digital Kanban board and agree with your employees to place every task they are processing
there.

Sustain

The last S is where most teams fail. To sustain the improvements you’ve made in the previous 4
steps, your team needs to understand and agree to commit to them.

Lean management relies heavily on shared leadership, so be sure to listen to your employees and
give them the liberty to suggest changes to achieve continuous improvement.

Establish feedback loops and encourage your team to look for ways to improve your process
further.

In Summary

5S is a great way to start with Lean management. It will allow you to optimize your workplace
and make it more efficient. With 5S you can:

 Sort the necessary from unnecessary tools for your team.

 Minimize process wastes by organizing your work environment.
 Keep your equipment in a perfect state and utilize it to the full potential.
 Standardize your work process.
 Sustain any changes that you’ve implemented and set yourself up for continuous improvement.

How to Reduce Cost of Delay by Implementing Lean?

Surprising or not, the major culprit for accruing cost of delay is an inefficient management
process.

Lean gives you a wide variety of options that you can implement to reduce this kind of waste and
therefore cut down CoD. Here are some of the ones that are going to bring an immediate effect:

Managing Workflow with Kanban

The Kanban method is a powerfull tool for optimizing your workflow in order to increase
throughput and efficiency. With its help, you can visualize every step of your process, even on a
global portfolio level, monitor how projects are progressing and where work gets stuck.

Among the strongest sides of Kanban for reducing cost of delay are the so-called WIP limits that
prohibit your team from working on more than an X number of tasks/projects simultaneously.

Taking Gemba Walks

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Gemba walks are a legacy of the Toyota Production System that turned the Japanese carmaker
into the world's largest automobile manufacturer.

They encourage managers to spend more time on the production floor (even if it is a digital one)
and monitor how work is being processed. Gemba walks are a great way to see for yourself what
causes any delays instead of relying only on progress reports.

While going on a Gemba, you need to look for any imperfections in the workflow and ask
questions like why the team is doing something in a specific way.

Tackle the Root Cause of Any Cost of Delay

Dealing with the root cause of a delay is the only way to make sure it won’t affect future
projects.

Lean provides you with 2 major methods for doing a root cause analysis:

 The 5 Whys
 A3 problem solving

The 5 whys is a method for digging deep into what caused any problem, including delays. It is an
effortless way to find the root causes. You just need to repeatedly ask the question “why” to
uncover what caused a delay.

A3 problem-solving model is a 7 step process for preparing a problem report in a short and
concise format. It can be applied easily in the context of dealing with delays. The name A3
simply comes from the European A3 paper size corresponding to 11-inches by 17-inches or
29.7cm x 42cm (the report's size).

The report usually consists of the following steps:

 Background/Clarify the problem (in our case, delay)

 Assessing the current situation
 Set targets/goals
 Root cause analysis
 Countermeasures
 Implementation
 Effect confirmation/Follow-up

Because preparing the report involves many people, it is good not only for finding the root cause
of any delays but promoting collaboration across the organization.

Adopt a culture of shared leadership

Last but not least, wait time is often caused by too many handoffs and micromanagement.

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Adopting a culture of shared leadership will allow your frontline team members to take
ownership of their part of the process.

You should allow each person to make decisions to some extent and make your process more
agile. This way, you will be able to reduce the wait time accrued from waiting on a bottleneck
supervisor who needs to approve every tiny detail even if it has small significance for the
organization.

As a result, delays will be less likely to happen due to cumbersome processes.

What is Value Stream Mapping (VSM)?

Quality Glossary Definition: Value stream mapping

Also called: value stream analysis, lean process mapping

Value stream mapping (VSM) is defined as a lean tool that employs a flowchart documenting
every step in the process. Many lean practitioners see VSM as a fundamental tool to identify
waste, reduce process cycle times, and implement process improvement.

VSM is a workplace efficiency tool designed to combine material processing steps with
information flow, along with other important related data. VSM is an essential lean tool for an
organization wanting to plan, implement, and improve while on its lean journey. VSM helps
users create a solid implementation plan that will maximize their available resources and help
ensure that materials and time are used efficiently.

Profitable Applications of Lean Value Stream Mapping

The original VSM template was created by Toyota Motor Company and implemented via
material and process flowcharts. This VSM illustrated the necessary process steps that existed
from order entry to final product delivery and was useful for gaining a wide-reaching view of the
company’s activities. It allowed Toyota to remove nonessential activities that created waste
while maintaining the manufacturing process.

The "value stream" portion of the VSM system centers on how value can be added to a product
or service by changing the market form or function to meet the customer’s needs. This includes
adding features and functionality to a product or service that benefit the customer without
increasing wasted time and materials (also called muda, the Japanese term for waste) on the
company’s side.

Scoping Out Your Value Stream Map

Understanding the scope of the value stream under examination is a good start when planning
your lean process or value stream map. This map is a single area in your organization. However,
when multiple plants, customers, or suppliers are included, an extended level map is created.

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Consider an extended level map as the view of the values stream at 60,000 feet, the facility level
map at 30,000 feet, and the process level map at 10,000 feet. It is best to start at diagramming a
facility level map before attempting to draw a process level map or extended level map so you do
not optimize one area and suboptimize another.

Step 1: Form a Team to Create the Lean Value Stream Map

Form a cross-functional team of high-level managers and supervisors from throughout your
company. Representatives from multiple departments, such as sales, customer service, inventory,
operations, and beyond, will help ensure that information can be passed freely back and forth,
and that items don’t slip through the cracks. Consider also adding important suppliers to this
group because an outside perspective can be helpful.

 The ideal team size is about 10 members. Small teams can miss important items, while
large teams can end up being difficult to manage and coordinate.

Step 2: The Kaizen Kick-Off – VSM Planning

After you’ve formed your VSM team, your next step is to hold a three-day kaizen event (see
Table 1). Kaizen is Japanese and means "change for the better." During a kaizen, team members
begin developing current and future plans.

Note: It’s important to include an individual with VSM experience to help facilitate the kaizen
event.

Value Stream Mapping, The Kaizen Kick-Off

At the kaizen event, the team must complete four important steps:

1. Determine the process family.

2. Draw the current state map.
3. Determine and draw the future state map.
4. Draft a plan to arrive at the future state.

Once these four steps have been completed and the team agrees with the plans and tactics, the
VSM team can proceed to the next steps.

Step 3: The Process Family – VSM Planning

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A process family, also known as a product family, is a group of products or services that go
through the same or similar processing steps. To determine your process family, create a matrix
similar to the example shown in Figure 1 below.

Value Stream Mapping, The Process Family Matrix

Along the top row, write all the process steps your organization performs from a 30,000-foot
point of view.

 In the first column, write down the parts (e.g., components, stock keeping units, finished
good items, or services) your organization makes or provides.
 Place an X in the corresponding box if the part goes through the processing step.

It’s important that this step is applied to all cross-functional teams and key areas within your
company. This helps ensure all vital steps are included and no steps are overlooked.

Step 4: Identifying Similarities

Examine the matrix and look for sections that have similar or identical processing steps. Also
look for sections that share about 80% of the steps. Consider items that share many of the same
steps and procedures that can be created together—by the same workers using similar or related
steps—more efficiently in a manufacturing cell.

Once you’ve identified similarities, the team must then identify which process family it will
concentrate on first. The list below represents some common reasons for picking certain areas,
and they are areas that the VSM team should consider:

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  Biggest "bang for the buck"
 Largest reduction in lead time or inventory
 Biggest impact to the customer
 Highest probability for success
 Most visible to stakeholders
 New product or service line
 Volume or quantity

Step 5: Creating the Current State Map – VSM Planning

To create a current state map, collect the data and information by "walking the flow" and
interviewing the people who perform the task. This is beneficial for two reasons:

1. The team will have the opportunity to see the entire process and look for waste.
2. The people who actually perform the work (e.g., operators, assemblers, technicians) can
answer questions and clarify any misconceptions or preconceived notions on how tasks
are performed.

When your team is "walking the flow," be sure to gather high-value information from
employees, including:

 Cycle time or processing time

 Changeover time
 Reliability of equipment
 First pass yield
 Quantities
 Number of operators and shifts
 Hard copy information
 Electronic information
 Inventory levels
 Queue or waiting times

The information gathered does not have to be perfect or overly detailed. As long as the data
provides a relatively clear picture of major issues, the team can begin building its lean process
map.

Step 6: Start by Creating the Basic VSM Template

Once your team has gathered and reviewed the information obtained while "walking the flow,"
begin drawing the value stream map. Figure 2 below shows some common examples and
strategies with VSM template development.

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Value Stream Mapping Template Development

Key areas on the map are:

 The upper-right corner for customer information

 The upper-left corner for supplier information
 The top half of the paper for information flow
 The bottom half for material (or product) flow
 The gutters on top and bottom to calculate value added and nonvalue added time

Calculate the cycle time vs. the inventory time (in days) for the material and information flow.
Each VSM will look slightly different depending on the process and how it was drawn. Figure 3
below features an example of a VSM current state map used for a metal fabricating company.

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Value Stream Mapping Current State Map Example

If this is one of the team’s first VSM kaizens, have the facilitator draw the map on a large dry-
erase board and then have the team members draw each of their own maps on paper (ideally in
pencil). The current state map is usually completed by the second day, but it may need refining.

Step 7: Creating the Future State Map

 What is the takt time?

o Takt is the German word for the baton a conductor uses to control his orchestra’s
speed, beat, and timing. Takt time refers to how frequently a part or component
must be produced to meet your customers’ demand. The formula is the time
available (per shift) divided by the demand (per shift). For example:
 22,000 seconds (time available)
 ÷ 200 pieces (demand)
 = 110 seconds/piece
 Are there bottlenecks or constraints?
o From the data collection during the kaizen, look at the cycle times or processing
times. If any of these are greater than your takt time, you have a candidate for a
bottleneck or constraint. This may be causing overproduction waste or work in
process (WIP) in some areas, or extra processing time, such as overtime, to meet
demand.
 Where can inventory (or queue time) be reduced or supermarkets used?

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 o A supermarket is a controlled inventory system—the downstream process
removes items from the shelf and the process owners upstream replenish that
amount to the supermarket.
o Look at raw material, WIP, buffer stock, safety stock, and finished goods
inventories to see whether these can be reduced. Does it make sense to put in a
supermarket replenishment system?
o The key is to find ways to reduce inventory in a logical manner. Also look for
opportunities for paperwork to flow and not sit around, like in batching.
 Where can you improve flow?
o Is it possible to put materials into a cell or eliminate materials from stopping and
waiting? If flow improvement isn’t possible, could a "first in, first out" lane be
established between processes?
 What other improvements are required?
o For instance, does the reliability of equipment need to be improved? Are the first
pass yield or quality levels acceptable? Is training in 5S (workplace organization)
needed? Does a new layout for an area need to be created?

On the VSM, place a kaizen burst (a sticky note or thought bubble) around any items to signal
improvement is needed. Items may include low equipment reliability or first pass yield; long
changeover times; large batches; any waste such as overproduction, motion, transportation,
waiting, defects, or adjustments; and over or extra processing.

Step 8: Creating the VSM Draft Plan

During a typical VSM event, it is possible to create the draft plan based on the information from
the future state map. The plan will need further refinement, especially in determining resources
required, such as time, people, and budgets. A good plan, as shown in the example below, will
include the description of the project, name of the project leader, possible team members, a
schedule (or Gantt chart) of events and deliverables, an estimate of costs, and the impact, goals,
or benefits.

Case study on VSM (Refer Future_VSM_FALL_2021_22 PPT)

Value Stream Mapping (VSM)

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 Figure 1: Lighter Factory Example - The different Symbols of VSM .

Value stream mapping is a lean tool that can be used to map processes in detail, based on the
both the flow of material as well as information. Data boxes make it possible to write important
aspects of each process step, such as changeover times, cycle times and machine availability,
which makes value stream mapping a great tool to use in (re)designing a value stream. In
traditional lean initiatives, a current state value stream map is drawn first after which a future
state map can be designed.

The first step in value stream mapping is de drawing of the PROCESS BOXES for the different
process steps, starting from the customer side going up to the supplier side. There are however
different types of process boxes for different kind of production steps (Illustration 1). All process
boxes may include the number of employees working on that process step.
Regular production step. From right to left, we first find the gas filling station. This is one
station with only one production step; filling the lighter with gas. One step with inventory before
and after it can be drawn as a normal process box.

One Piece Flow. The next step is assembly. This step actually contains 5 different steps, adding
all the small parts on the top of the lighter. However, since there is no inventory between these 5
steps, and the cell works as a one piece flow line. To show that the process box contains multiple

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production steps in a work cell, a U is added to the symbol, which represents the ideal form of a
cell: the U-cell.

Batch process. The third process step found is a logo printing station, which prints logo´s on the
lighters. This is still one machine; however, the logos are printed on the lighters per 10. We can
visualize that on the VSM with a triangle inside the process box.

Parallel machines. A little further upstream, we find the painting station, where white bodies are
sprayed into a certain color. Coloring is a relatively long process; therefore there are 5 machines
who can work in parallel. Parallel machines can be visualized in the VSM by drawing a second
box behind the first one, and indicating the number of machines on the bottom right.

Shared Resources. Finally, there is a molding process, where standard white bodies of the
lighters are molded. However, it’s not only lighters that are molded here, the factory also
produces pens. Since pens are a different product family, this production step is a shared
resource, a resource that is used for multiple product families. A shared resource is visualized by
adding a grid to the process box.

Rework also has its own symbol. In this example, rework is sometimes necessary after the
assembly step. Whether or not the rework step is included in the VSM depends on the amount of
time it takes to do the rework (which results in a important influencer in the lead time) and the
percentage of products that need rework.

The second step in value stream mapping is DATABOXES, in which data is captured of each of
the process steps drawn in the map. Everything that might be interesting for VSM design can be
put here. In illustration 2, different numbers are added for the different process steps.
Process time is the time one product spends in a process step. This can be measured with the
red-dot principle. Put a red dot on a product before it goes into a machine and measure how long
it takes for it to come out on the other end.

Cycle time is the time between two products coming out of the process step. For regular and one
piece flow boxes, the cycle time and process time are the same. For batch- and
parallel processes, the cycle time is shorter than the process time because multiple products are
worked on at the same time, and for shared resources, the cycle time is longer than the process
time, because the machine is not producing products for this value stream all the time.

Uptime can be used to show how often the machine produces without producing defects
Availability to show how often the machine is available for this particular value stream
Change over (C/O) can be used to log how long it takes to change over from one product in the
product family to another.

Batch can show how many products are worked on at the same time, and EPEI (every product
every interval) can show the maximum lead time for on product within the family.

The third step is to draw the CONNECTION METHODS between the process boxes. There are
three possibilities, all show in illustration.

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 3. Push (unstructured) inventory. Between molding and painting, a traditional push method is
used. The shared resource is very expensive to use, so when it is available it just produces as
many products for our product family as possible. This type of inventory is drawn with a triangle
and a dotted arrow and means the inventory has no maximum number of products and no
sequence in which the products are used at latter stage.

Supermarket is the second type of inventory and can be found between painting and logo
printing. In the example case, different colors of lighters can be sold and the supermarket
contains each of those colors. Only when a certain color is taking out of the supermarket, the
paint shop will produce new products with that color. The machine filling up the supermarket
only produces when there is room in the supermarket, which means it is a pull signal. The
supermarket is preferable over a push inventory because it has a maximum number of products
allowed in it.

FIFO (First-in-First-Out) is the third type of connection. In the lighter case, we find one
between Logo printing and Assembly because after the logo is printed on the lighter, it is
customer specific and therefore the sequence in which the products are worked on further down
the line is important to make sure the customer gets his product on time. The FIFO is also a pull
system because the upstream machine can only produce when there is room in the FIFO. It is
preferable over the supermarket because it not only has a maximum number of products in it, but
also has a fixed sequence in which the orders are worked on.

Step four describes linking CUSTOMERS AND SUPPLIERS to the process. Customers can
be linked in two ways, depending on the finished good strategy the company has. The lighter
case here has a direct shipping strategy, since the lighters are printed customer specific, so there
is no extra symbol of inventory after the last process box. When a made-to-stock strategy is used,
there could be a supermarket there.

Suppliers are usually regulated with an unstructured inventory (not desirable), or a supermarket,
like in our lighter example shown in illustration 4.

Step five is the LEAD TIME LADDER on the bottom of the VSM, which shows different
aspects of time in the value stream. The lead time Ladder is added to the VSM in illustration 5,
and all times are in seconds (s). Underneath each process box, the Process time is written,
because it tells us how much time a product spends on that workstation.

Underneath each inventory level, the waiting time is estimated to show how long the product
has to wait between workstations. In the current state map, this can be calculated by the number
of products counted at the moment of drawing, multiplied by Takt-time. In the lighter example,
when you count 10,000 products in the inventory before painting, and the customer demands 1
lighter every 10 seconds, the time the average lighter waits in the inventory is 10 x 10,000 =
100,000 seconds, which is 1.15 days of waiting time.

Finally, the production lead time can be calculated which is all the process times plus all the
waiting times together. In this example the total of 248,130 Seconds, 2.87 days. Interesting to

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note is, that actually only 0.5% of the total lead time is process time. The other 99.5% are the
time the product spends waiting in inventories.

After the material flow is drawn, step 6 describes drawing the INFORMATION FLOW. The
information flow shows how each workstation knows what to produce. Illustration 6 shows the
most commonly used symbols for the information flow.

Draw the control signal from planning to each machine that receives a signal. It is not unusual
that multiple machines are sent separate signals. Ideally, the production plan is only sent to one
workstation, which is then called the pace maker. In the lighter case, one electric signal is send to
the Painting station, so that they know what Logo they need to paint and on what color the
lighters should be used. Workstations behind a FIFO lane or before a supermarket do not need
their own schedule, since they will simply take the next product from the FIFO in front of them
or replenish what was taken from the supermarket behind them.
When production leveling is used, the signal to a workstation includes a box with XOXO in it.
This means the customer demand for that workstation is not made in FIFO sequence, but
balanced in time.

The third added symbol in illustration 6 is a Kanban signal.

Kanban is a visual way of managing the replenishments of supermarkets in which physical cards
are collected from empty supermarket slots, which tells the upstream machine exactly what
should be produced to replenish these.

In general, there are no rules in value stream mapping. If a specific situation cannot be caught on
paper using the symbols described above, one can think of Icons themselves to visualize that
specific situation. This article covers the most widely used symbols, to give an impression on
what can be mapped. The goal of VSM is to learn about the process and look for possible
improvements using the 8 steps for designing a future state map

Steps to Future Value Stream Mapping (VSM) design

Value Stream Mapping (VSM) is one of the most important lean tools, used to improve the flow
of materials and information. What a VSM is and an introduction in the VSM symbols is already
discussed in the article: ´Value Stream Mapping´. There are different methods to design a Future
State VSM.

THE EIGHT STEPS OF FUTURE VSM

1. Can all processes keep Takt time?

2. What is the finished Goods strategy?
3. Where can we implement One-piece Flow?
4. Where can we implement FIFO?
5. Where can we implement Supermarkets?
6. Which processes need a production plan?
7. How is the production plan leveled?

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 8. In what increments is the production plan released?

The following slides show how I used the 8 steps to develop a future state VSM in a lighter
factory.

Figure 1: Lighter Factory Example - Future State VSM

When I first visited the Lighter factory, the production processes were a traditional push system,
as shown in slide one. THE CURRENT STATE includes 6 process steps, with between them
uncontrolled inventory. Every process step needed an individual Production signal to know what
to produce next.

Other information that was gathered before one can start the 8 steps is the average daily demand
(2500 pieces per day in this case) and the available capacity (7.5 hours) to be able to calculate
Takt time: 10.8 Seconds.

An interesting fact is that the order lead time of a lighter 12 days and 42 seconds entails, of
which the actual process time is only 42 seconds. This means we are dealing with a classical
process of which 99% of the lead time is waiting time, and therefore non-value adding.

The first step in developing the future state is to CHECK TAKT TIME FOR ALL
WORKSTATIONS. Can all workstations meet customer demand? When we take a look at all
process boxes separately, we find that the most upstream workstation, molding, cannot deliver to
Takt. This shared resource only produces for our Lighter VSM 50% of the time.

There are now at least two possible Kaizen events to be defined: either we increase availability
for our VS, or we reduce the process time of the machine. In this case, we chose for the later and
defined the goal for the first Kaizen event to increase availability of the molding machine to
60%.

The second step is CHOOSING THE FINISHED GOODS STRATEGY. There are two
possibilities here: made-to-order, in which products are shipped to the customers after
production, or made-to-stock, where finished goods will be held even though there is no order
yet.
In the lighter example, all lighters are customer specific because they have their logo´s printed on
them, so the obvious choice is a Made-to-order strategy.

Step 3, 4 & 5 of future state VSM are about IMPLEMENTING THE PULL SYSTEM. More
information about the 3 possible pull connections can be found >here<.
First we check where we can implement one-piece flow. And as shown in slide 4, the two
assembly steps could form one new workstation when we define a kaizen event to improve the
yield of both workstations.

Then, we check for the remaining connections if we can implement FIFO. There are two
locations which are suitable for a FIFO; before assembly and before gas filling. Since the

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lighters have customer specific logo´s printed on them before these two steps, a fixed sequence
can be kept within those pull connections.

FIFO;

The two remaining triangles will have to be supermarkets. Before painting station can replenish
any color of lighter that is taken out of the supermarket behind it, and the supermarket before the
painting station is used to buffer for basic molds, which can be taken by the painting station as
needed.

Supermarkets:

The context of production control, Kanban refers to the visual signals that authorize the
production or movement of items. Kanban are sometimes referred to as the nervous system of a
lean production system. Just like our human brains send instructions to our various body parts, a
Kanban system gives production control instructions to each and every work area. It does this by
connecting Information flow with material flow by attaching Kanban cards to the actual goods.
The Kanban system was developed by Taiichi Ohno of the Toyota Motor Corporation as a way
to make Toyota's vision of Just In Time manufacturing a reality on the production floor. Ohno's
original aim was to stop overproduction in his machine shop which was creating large
inventories and costing a lot of money. Mr. Ohno was inspired to create the Kanban system by
the product replenishment methods he observed in American supermarkets.

What caught his attention was the way shelves were restocked with goods only after products
were consumed - in other words "pulled" - by customers. In the broadest context, Kanban is a
tool of the Just in Time system. At the most basic level a Kanban is a signal that authorizes the
production or movement of items. We often use a chain laying on the ground to visually
demonstrate the difference between a Kanban, pull based system, and the traditional push system
that doesn't use Kanban. When we attempt to move the chain by pushing it we end up with this
type of situation. Just as the chain is uneven and loose. The push production systems often
create uneven inventory levels resulting is having too much of the wrong inventory and not
enough of the correct inventory. But when we pull production through the system, meaning we
only produce product when it's required, the chain is tight resulting in all processes having the
right inventory when they need it.

With this said, Kanban systems are far from perfect. You see, the Kanban system can be full of
wastes such as excessive handling, inventory and processing. In fact, the ideal Just-in-Time
production system would use no Kanban at all so long as it produces what the customer wants,
when they want it, in the quantity they want. In other words, our goal shouldn't be to implement
a Kanban system. Instead, our goal should be to true, one piece, flow. OK, let's now move our
attention to the different functions of Kanban. First of all, a Kanban sets limits within a
production system. You might think of a Kanban card as a type of currency that's exchanged for
an item much like money is used to buy parts or materials. If there's no Kanban - no items get
moved or produced. When a Kanban system functions correctly, nothing is ever made or moved
without a Kanban signal of some kind. This enables companies to limit the extremely deadly
waste of overproduction since things are NOT produced until they're needed. In addition to

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setting limits, Kanban also physically link material and information flow through a card or, as we
often see today through a bar code scan. And finally, Kanban makes abnormalities visible since
no material should be without a Kanban and no Kanban on the shop floor should be found
anywhere but attached to the material, in the heijunka board or in the Kanban post box.

The first type of Kanban is the classic 2- card system where production and withdrawal Kanban
cards are used. In this example, we see a shaded withdrawal Kanban going from shipping to the
supermarket. This is a signal from shipping to the supermarket that it needs product to meet a
customer request. Once the shipping clerk removes product from the supermarket a production
Kanban will be sent to the assembly department signaling there's an item missing in the
supermarket that needs to be replenished. Now, we'll get into this in more detail later in the
course but a Kanban card normally contains information such as the Part name and number, the
Supplier process name, the quantity per container, the Delivery address, the Storage address and
the number of cards in the system.

A Kanban system using cards differs most significantly from the two bin system, which we'll
discuss shortly, in that the card is pulled as soon as the first part is taken. The next type of
Kanban system is referred to as the "1-card" system. And while we refer to it as 1-card there may
not be a card used at all. Instead, we might use empty containers, or carts, or colored golf balls,
or ping pong balls, a light, or really any kind of signal that conveys information. One of the most
practical examples of a one card Kanban system is the mailbox flag. When the flag is up, a signal
is sent to the postal worker that there's something inside the mailbox we wish to mail.
Another system that doesn't rely on traditional Kanban cards is the 2-bin system. In the 2-bin
system, standardized bins or containers perform the role of the Kanban card. An empty bin
signals that more parts are required. The collection of empty bins should follow time-based
standard work whenever possible so that one person can supply the materials reliably for a
department or section.

Here's an example of how a 2 bin system works. It uses two bins with an equal amount of goods
inside and the same information on the outside about the contained goods such as name, location,
and quantity within each bin. Parts are then consumed from the first bin as shown here. When the
first bin is empty this is the signal to bring or replenish two more bins. The second bin then slides
forward into position while two more bins are being prepared. Finally, a Material handler
replenishes two bins within the agreed lead-time which will obviously be before all the parts are
consumed from the second bin. And while there are other Kanban systems, these are some of the
most common.

Step 6, 7 and 8 are about production control. Step 6 starts with making decisions about THE
PACEMAKER SIGNAL. The less signals there are needed in production, the easier it is to
manage the process. Rother & Shook (1999) therefore describe to strive for having only one
signal, the pacemaker.

In the lighter example, only the logo printing station needs to have a production schedule. The
two workstations downstream from logo printing just keep the sequence and take the next order
from the FIFO lanes, and the two stations before printing simply replenish the supermarkets. In
step 7, the PRODUCTION SCHEDULE IS LEVELED. The speed in which a process can

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respond to changes in customer demand is dependent on the interval in which all products in a
product family can be produced, the EPEI (Every Product Every Interval). When all colors of
lighters are produced once a week, a customer might have to wait 4 days longer for his order
than when every color can be produced every day.

In this step, the shortest possible interval is determined in which Takt can still be kept. More
information about production leveling can be found in the article on Heijunka and in Duggan
(2002).
In the lighter factory, every color can be produced every day without having to define an extra
kaizen event.

The final step is DETERMINING THE PITCH of the value stream, which is also discussed in
the article on Heijunka. The smaller the interval, the more flexible order management can plan
the orders for production.

In our lighter factory example, the interval is set at 20 minutes. This means the scheduling
department can change the order book for the entire production line after current pitch of 20
minutes, without anyone in production noticing (slide 9).

To conclude the presentation, slide 10 shows THE FUTURE STATE VSM as a result of the 8
steps described above; with an updated Lead time Ladder. By implementing pull we have
reduced the order lead time from 12 to 5.5 days, an improvement of more than 50%.
We also reduced the number of control signals from 6 to one, which reduces management
complexity and because of Heijunka and Pitch, every type of lighter can be produced every day,
and the daily plan can be changed every 20 minutes without disturbing production.

The most important thing in designing the Future State VSM is using a structural approach to
generate the Kaizen events, to make sure the kaizen events directly improve the performance of
the Value Stream. The kaizen event on yield improvement at the assembly is a good example of
that. We could for instance have randomly decided to implement SMED on the logo printing
machine, because the change-over times are there, but from the structural approach we learned,
that the change-over times are not preventing us from delivering the customer. Maybe it will
come up in the next future state VSM?

SMED

Setup reduction techniques were already being tested in the early 1900s with Ford Motor Co.
using some techniques in 1915, as clearly described in the publication Ford Methods and Ford
Shops; however, the first set of SMED processes were developed by Toyota.

After observing stamping presses with rapid-change capability, Toyota machine shop manager
Taiichi Ohno purchased multiple presses and began working on rapid changeover processes.
This eventually led to a reduction in the time it took to change tools from between two and eight
hours to 15 minutes in the 1960s, to three minutes about a decade later, and to 180 seconds in the
1990s.

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Single-minute exchange of dies (SMED) was officially developed by Japanese industrial
engineer Shigeo Shingo – an ousted Toyota employee who moved to the United States and
became a lean manufacturing consultant. Shingo's SMED process led to an average reduction in
changeover times of 94 percent across multiple industries. That's like going from a 90-minute
changeover to one that is less than five minutes.

Implementing an SMED program has multiple benefits in regard to minimizing waste and going
lean. A successful SMED program can:

 Lower manufacturing costs. Quicker changeovers mean less equipment downtime.

 Produce smaller lot sizes. Quicker changeovers let you change products more frequently.
 Improve schedule flexibility, which helps with being responsive to customer demand.
 Lower inventory levels.
 Improve machine startups. Standardizing changeover processes ensures consistency and
quality.

The Basics of SMED

In an SMED process, changeovers are comprised of steps or "elements." There are two types of
elements: internal and external.

 Internal elements must be completed when the equipment is stopped.

 External elements can be completed while the equipment is running.

The main goal of the SMED process is to have as many external elements as possible while
streamlining and simplifying all other elements.

Improving your changeover times by an average of 94 percent may be difficult to comprehend,

but consider one of the most popular SMED examples: a NASCAR pit crew changing a tire. Pit
crews use certain techniques to drastically lessen the time it takes to change a tire; a process that
normally takes around 15 minutes for most people to change one tire takes a pit crew around 15
seconds to change four tires. Pit crews employ several SMED techniques, such as doing
everything they can before the pit stop begins, using a coordinated team performing multiple
roles simultaneously and creating a highly standardized process.

When it comes to the manufacturing world, Toyota noticed the most difficult tools to change
were the dies on the larger transfer-stamping machines that make various parts of a vehicle's
body. The problem? The dies had to be changed with the production of each car model. They
also weighed several tons and needed to be built into the stamping machines with tolerances of
less than 1 millimeter.

Taking a look at their current changeover process, Toyota engineers noticed the procedure
entailed stopping the line, letting the dies down by overhead cranes, eyeballing positioning of the
dies into the machines and then adjusting the positioning using crowbars while making single
test stampings. With this procedure, it took anywhere from 12 hours to three days to complete.

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To improve this process, Toyota first placed precision measurement devices on the transfer-
stamping machines and recorded the measurements for each model's die. These standardized,
pre-recorded measurements to install the die, as opposed to using human eyesight, immediately
cut the changeover time to an hour and a half. Other improvements included scheduling the die
changes in standard sequences as new car models moved through the plant, ensuring all tools
needed for the die-change processes were nearby and scheduling the overhead cranes so the new
die would be ready to go as the old ones were being removed.

Implementing SMED

Step 1 – Identify a Pilot Area

One of the first things to consider before implementing SMED is the pilot area. It might be
tempting to pick a process with the longest changeover time. While that is a factor, you'll want to
make sure of a few things, such as the following:

 The changeover time is short enough to fully understand and long enough to show
significant improvement.
 There are multiple variations in changeover times. This tells you there is a great chance
for improvement.
 There are multiple chances to perform the changeover each week. This lets you quickly
test improvements.
 Employees in the proposed pilot area are engaged and motivated.

In this step, it's important to get everyone onboard with the SMED implementation; this includes
all employees associated with the selection process and those who will work on the changeover.

Step 2 – Identify Elements

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After you've determined your pilot area, it's time to work together with your SMED team to
identify all the changeover elements – internal and external. One of the most effective ways to
visualize every step is by videotaping an entire changeover as it is currently performed and then
sitting down with your team to record lists of each element, reordering as needed. Include a
detailed description of each task performed and how long each task takes to complete (cost in
time). This video and outline can also serve as a baseline. Some things to keep in mind:

 A typical changeover results in around 30 to 50 elements on average.

 Capture both human and equipment elements. Many elements are human and can be
easily optimized, as we'll see later.
 While videotaping a baseline changeover, have multiple team members observe and take
notes. Compare their notes with what you discover while watching the video, breaking it
down to ensure nothing is missed.

Once step two is finished, you should have a complete list of all changeover elements with a
description and cost in time for each.

Step 3 – Separate External Elements

Can this element be performed while the machine is running? This is the question your team
needs to ask of each element you documented in step two. Any element in the changeover
process that can be completed with little or no change while the machine is in operation must be
identified and labeled as "external" to the process; in other words, the element can be done
before or after the changeover. In many cases, this step alone can cut changeover time in half.

Elements usually considered external might include the retrieval and inspection of parts, tools
and materials (like instructions); any cleaning tasks that can be done while the SMED process is
running; and quality checks.

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Once step three is completed, you should have an updated list of changeover elements divided
into external elements (before changeover), internal elements (during changeover) and external
elements (after changeover).

Step 4 – Convert Internal Elements to External Elements

Which internal elements can be converted to external elements? This question should be at the
forefront of everyone's mind as you go through the changeover process with a fine-tooth comb.
Breaking down the question even further, your team might ask: If there is a way to make this
element external, what would it be and how can we do it?

What's left after this evaluation is a list of elements that require further action. Prioritize this list
so the elements with the most promising results are dealt with first. In other words, perform a
cost/benefit analysis on each element from the list. In this case, "cost" is measured by the labor
and materials you'll need to make the necessary changes, while "benefit" is measured by the time
that will be removed from the changeover once the element is converted.

Consider the following techniques to convert internal elements to external:

 Advance preparation: Preparing parts in advance and keeping them in a ready-to-go

status can cut a significant amount of time.
 Make adjustments prior to the changeover: Consider using duplicate jigs for
performing alignment and other adjustments before the changeover process begins.
 Equipment modification: Modify equipment to make it safer to perform tasks (like
cleaning) while the machine is running.
 Modularize equipment: Equipment portability and customization can reduce the
number of interfaces or interactions, resulting in significantly faster changeover times.
For example, designing equipment on skids can make each piece highly mobile.

Once this step is completed, you should be left with a new list of changeover elements that
includes fewer internal elements and more external elements which are performed either before
or after a changeover.

Step 5 – Streamline Remaining Elements

How can this element be done in less time? Or, how can we simplify this element? Finally, your
SMED team should review the remaining elements on your list with the focus of simplifying
them so they can be done in less time. Since the goal is to reduce changeover time, give priority
to internal elements before moving onto the external. Use a cost/benefit analysis to prioritize the
remaining steps.

Some of the easiest ways to streamline elements include replacing bolts with quick-releases or
other functional clamps, eliminating adjustments by standardizing numerical settings, using
centerlines and shims to standardize die sizes, cutting out motion by adjusting the layout of
workspaces, standardizing hardware to use fewer tools, and reducing wait times.

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Another technique for streamlining processes is to create simultaneous operations. Just like a
NASCAR pit crew changing a tire, multiple operators can perform a task simultaneously. Pay
close attention to hazards and safety issues and ensure work is carefully choreographed and
standardized.

Once step five is completed, update your standardized work instructions for the changeover.

Factors to Consider While Implementing SMED

While nearly every company that deals with changeovers can benefit from SMED, it's important
to look at where productivity time is being lost to determine whether it should be your top
priority. This is done by analyzing hard data, such as overall equipment effectiveness (OEE),
specifically the OEE loss categories as they pertain to the six big losses. Collect this data for a
couple of weeks to get a snapshot of where time is being lost. If you notice that changeovers
comprise at least 20 percent of this time, SMED might be a good process to implement. If not,
you might want to focus on total productive maintenance processes.

 Capture a baseline. Consistently measuring changeover time is critical, so you need to

define how you'll measure it. According to lean manufacturing publisher Vorne,
"Changeover time is measured from the last good part of the previous job at normal
production speed to the first good part of the net job at normal production speed." Once
you've defined how to measure changeover time, create a baseline by recording video of
a normal changeover.
 Ask questions. Having an inquisitive mindset and asking how every element can be
made external is the best way for SMED teams to approach the process. The following
questions can help your SMED team achieve this mentality:
o Separate: Can this particular element be done with minimal to no change while
the machine is running?
o Convert: How can we convert this internal element into an external one?
o Streamline: How can this element be simplified, streamlined and completed in
less time?
 Standardize best practices. With the implementation of SMED comes a concern that
machine operators will tend to rush through the changeover process, putting quality and
safety at risk. The most effective SMED programs standardize processes and procedures
by using things like single-point lessons for continuity in quality and safety. Treat
instructions as living documents by having a process in place to continuously update
them as needed.
 Focus on human improvements. Implementing an SMED program should require you
to consider two categories of improvement: a human category, which is achieved through
organization and preparation, and a technical category, which is attained through
engineering and optimization. Ensuring the human factor is in good shape not only is
faster but also less expensive, as human improvements are made during setup time as
opposed to implementation time/effort.

Human improvements can be made by defining roles, metrics and accountability; offering
training, coaching and brainstorming sessions on immediate improvement ideas; and

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 creating standardized work instructions. Other human factors include keeping parts near
the changeover areas at all times, labeling known equipment settings, and eliminating
waiting and unnecessary motion.

SMED Pitfalls to Avoid

For a successful implementation of an SMED program and for these concepts to work, teams
should avoid a few common pitfalls.

 Failure to organize: At least half of reducing changeover times revolves around better
organization. That's why step three of the implementation process – separating external
elements — can cut changeover times in half. After you've done this, it's time to get
organized.

Your SMED team should address who will perform these external elements. Should it be
an operator? A dedicated setup person? A combination of the two? The answer most
likely depends on the types of processes and external activities. For example, most
modern presses are highly automated, so an operator will be able to perform all the
necessary activities. If you have more traditional machines, multiple people may be
needed to complete the required duties.

OEE

What is Overall Equipment Effectiveness?

OEE (Overall Equipment Effectiveness) is the gold standard for measuring manufacturing
productivity. Simply put – it identifies the percentage of manufacturing time that is truly
productive. An OEE score of 100% means you are manufacturing only Good Parts, as fast as
possible, with no Stop Time. In the language of OEE that means 100% Quality (only Good
Parts), 100% Performance (as fast as possible), and 100% Availability (no Stop Time).

Measuring OEE is a manufacturing best practice. By measuring OEE and the underlying losses,
you will gain important insights on how to systematically improve your manufacturing process.
OEE is the single best metric for identifying losses, benchmarking progress, and improving the
productivity of manufacturing equipment (i.e., eliminating waste).

Simple Calculation
The simplest way to calculate OEE is as the ratio of Fully Productive Time to Planned
Production Time. Fully Productive Time is just another way of saying manufacturing only Good
Parts as fast as possible (Ideal Cycle Time) with no Stop Time. Hence the calculation is:

OEE = (Good Count × Ideal Cycle Time) / Planned Production Time

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Although this is an entirely valid calculation of OEE, it does not provide information about the
three loss-related factors: Availability, Performance, and Quality. For that – we use the preferred
calculation.

Preferred Calculation
The preferred OEE calculation is based on the three OEE Factors: Availability, Performance, and
Quality.

OEE is calculated by multiplying the three OEE factors: Availability, Performance, and Quality.

Availability

Availability takes into account all events that stop planned production long enough where it
makes sense to track a reason for being down (typically several minutes).

Availability is calculated as the ratio of Run Time to Planned Production Time:

Availability = Run Time / Planned Production Time

Run Time is simply Planned Production Time less Stop Time, where Stop Time is defined as all
time where the manufacturing process was intended to be running but was not due to Unplanned
Stops (e.g., Breakdowns) or Planned Stops (e.g., Changeovers).

Run Time = Planned Production Time − Stop Time

Performance

Performance takes into account anything that causes the manufacturing process to run at less
than the maximum possible speed when it is running (including both Slow Cycles and Small
Stops).

Performance is the ratio of Net Run Time to Run Time. It is calculated as:

Performance = (Ideal Cycle Time × Total Count) / Run Time

Ideal Cycle Time is the fastest cycle time that your process can achieve in optimal
circumstances. Therefore, when it is multiplied by Total Count the result is Net Run Time (the
fastest possible time to manufacture the parts).
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Since rate is the reciprocal of time, Performance can also be calculated as:

Performance = (Total Count / Run Time) / Ideal Run Rate

Performance should never be greater than 100%. If it is, that usually indicates that Ideal Cycle
Time is set incorrectly (it is too high).

Quality

Quality takes into account manufactured parts that do not meet quality standards, including parts
that need rework. Remember, OEE Quality is similar to First Pass Yield, in that it defines Good
Parts as parts that successfully pass through the manufacturing process the first time without
needing any rework.

Quality is calculated as:

Quality = Good Count / Total Count

This is the same as taking the ratio of Fully Productive Time (only Good Parts manufactured as
fast as possible with no Stop Time) to Net Run Time (all parts manufactured as fast as possible
with no stop time).

OEE

OEE takes into account all losses, resulting in a measure of truly productive manufacturing time.
It is calculated as:

OEE = Availability × Performance × Quality

If the equations for Availability, Performance, and Quality are substituted in the above and
reduced to their simplest terms the result is:

OEE = (Good Count × Ideal Cycle Time) / Planned Production Time

This is the “simplest” OEE calculation described earlier. And, as described earlier, multiplying
Good Count by Ideal Cycle Time results in Fully Productive Time (manufacturing only Good
Parts, as fast as possible, with no Stop Time).

Why the Preferred OEE Calculation?

OEE scores provide a very valuable insight – an accurate picture of how effectively your
manufacturing process is running. And, it makes it easy to track improvements in that process
over time.

What your OEE score doesn’t provide is any insights as to the underlying causes of lost
productivity. This is the role of Availability, Performance, and Quality.

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In the preferred calculation you get the best of both worlds. A single number that captures how
well you are doing (OEE) and three numbers that capture the fundamental nature of your losses
(Availability, Performance, and Quality).

Here is an interesting example. Look at the following OEE data for two sequential weeks.

OEE Factor Week 1 Week 2

OEE 85.1% 85.7%

Availability 90.0% 95.0%

Performance 95.0% 95.0%

Quality 99.5% 95.0%

OEE is improving. Great job! Or is it? Dig a little deeper and the picture is less clear. Most
companies would not want to increase Availability by 5.0% at the expense of decreasing Quality
by 4.5%.

Calculation Example
Now let’s work through a complete example using the preferred OEE calculation. Here is data
recorded for the first shift:

Item Data

Shift Length 8 hours (480 minutes)

Breaks (2) 15 minute and (1) 30 minute

Downtime 47 minutes

Ideal Cycle Time 1.0 seconds

Total Count 19,271 widgets

Reject Count 423 widgets

Planned Production Time

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As described in the OEE Factors page, the OEE calculation begins with Planned Production
Time. So first, exclude any Shift Time where there is no intention of running production
(typically Breaks).

Formula: Shift Length − Breaks

Example: 480 minutes − 60 minutes = 420 minutes

Run Time

The next step is to calculate the amount of time that production was actually running (was not
stopped). Remember that Stop Time should include both Unplanned Stops (e.g., Breakdowns) or
Planned Stops (e.g., Changeovers). Both provide opportunities for improvement.

Formula: Planned Production Time − Stop Time

Example: 420 minutes − 47 minutes = 373 minutes

Good Count

If you do not directly track Good Count, it also needs to be calculated.

Formula: Total Count − Reject Count

Example: 19,271 widgets − 423 widgets = 18,848 widgets

Availability

Availability is the first of the three OEE factors to be calculated. It accounts for when the process
is not running (both Unplanned Stops and Planned Stops).

Formula: Run Time / Planned Production Time

Example: 373 minutes / 420 minutes = 0.8881 (88.81%)

Performance

Performance is the second of the three OEE factors to be calculated. It accounts for when the
process is running slower than its theoretical top speed (both Small Stops and Slow Cycles).

Formula: (Ideal Cycle Time × Total Count) / Run Time

Example: (1.0 seconds × 19,271 widgets) / (373 minutes × 60 seconds) = 0.8611 (86.11%)

Performance can also be calculated based on Ideal Run Rate. The equivalent Ideal Run Rate in
our example is 60 parts per minute.

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Formula: (Total Count / Run Time) / Ideal Run Rate

Example: (19,271 widgets / 373 minutes) / 60 parts per minute = 0.8611 (86.11%)

Quality

Quality is the third of the three OEE factors to be calculated. It accounts for manufactured parts
that do not meet quality standards.

Formula: Good Count / Total Count

Example: 18,848 widgets / 19,271 widgets = 0.9780 (97.80%)

OEE

Finally, OEE is calculated by multiplying the three OEE factors.

Formula: Availability × Performance × Quality

Example: 0.8881 × 0.8611 × 0.9780 = 0.7479 (74.79%)

OEE can also be calculated using the simple calculation.

Formula: (Good Count × Ideal Cycle Time) / Planned Production Time

Example: (18,848 widgets × 1.0 seconds) / (420 minutes × 60 seconds) = 0.7479 (74.79%)

The result is the same in both cases. The OEE for this shift is 74.79%.

Implement OEE

This page is a “quick start guide” for measuring OEE. It provides a roadmap of key decisions
and is organized in three parts:

 Define Project (things to decide before you start your OEE project)
 Capture OEE Data (everything you need to calculate OEE)
 Capture Detailed Loss Data (everything you need to calculate Availability, Performance,
and Quality)

Define Project

Select Pilot Area

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When implementing any new initiative, it is usually best to start small and expand from a base of
success. For OEE, that means starting with a pilot implementation on a single machine, cell, or
line.

Select a pilot area where your employees are engaged and motivated; ideally an area where
employees are interested in learning new things and applying ideas towards improvement.
Preferably, select a pilot area that manufactures either one part or multiple parts with the same
cycle time.

Identify Constraint

OEE should be measured at the constraint step of your process (sometimes referred to as the
bottleneck). The constraint is the single step or machine that governs (i.e. limits) the throughput
of the overall process. Improving the constraint will improve the overall process.

Identify the constraint step of your process. Tip – WIP often accumulates at the constraint. On
lines where equipment is balanced to run at identical speed, measure OEE at the step that does
the primary work

Measurement Method

OEE measurement can be manual or automated.

We recommend starting with manual OEE measurement. It reinforces the underlying concepts
and provides a deeper understanding of OEE. Later, you may want to automate data collection to
improve accuracy, track the Six Big Losses, and to generate top losses and other reports.

Capture OEE Data

Only three pieces of information are needed to calculate OEE: Good Count, Ideal Cycle Time,
and Planned Production Time.

Good Count

Good Count should only include parts that are defect-free the first time through the process. This
is similar in concept to First Pass Yield, which defines good parts as units that pass through the
manufacturing process the first time without needing rework.

Identify how you will collect Good Count. For manual measurement look for a counter
immediately after the constraint that reliably counts good parts. For automated measurement
look for a sensor immediately after the constraint that is triggered only for good parts.

Ideal Cycle Time

Ideal Cycle Time is the theoretical minimum time to produce one part (it is NOT a ‘budget’ or
‘standard’ time). It is important that Ideal Cycle Time be a true and honest measure of how fast
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the process can run, even if the process currently runs slower due to product, material, or
equipment problems.

Determine the Ideal Cycle Time. The preferred method is to use Nameplate Capacity (the design
capacity specified by the equipment builder). An alternate method is to perform a time study
(measuring the absolute fastest speed the process can support).

Planned Production Time

Planned Production Time is the total time that the manufacturing process is scheduled for
production. It is the yardstick against which Fully Productive Time is measured.

Start with shift time and decide if certain types of planned stops will be excluded (i.e., will not
count against OEE). Most companies exclude only breaks (including lunches) and meetings.

Capture Detailed Loss Data

In order to leverage OEE to improve manufacturing productivity it is essential to calculate the
three OEE factors: Availability, Performance, and Quality. This requires two more pieces of
information: Run Time and Total Count. Since in practice Run Time is calculated as Planned
Production Time less Stop Time, we need to collect Stop Time.

Stop Time

Stop Time is defined as all time where the manufacturing process was intended to be running but
was not due to unplanned stops (e.g., breakdowns) or planned stops (e.g., changeovers).

Decide how to record stop time. For manual measurement a tick sheet is usually the easiest way
to collect stop time (an alternative is to record start and end times for each stop). For automated
measurement the data collection system will automatically record these times.

Decide the time threshold for recording stops. Any stop that reaches the threshold is recorded
and is included as Stop Time (an Availability Loss). Any stop shorter than the threshold is
considered a small stop (a Performance Loss) and is not recorded. A typical stop threshold is five
minutes for manual systems and two minutes for automated systems.

Total Count

Total Count is required to measure OEE Quality. It can be measured directly, or Reject Count
can be measured instead, and added to Good Count to calculate Total Count.

Decide if you will measure Total Count or Reject Count. For manual measurement of Total
Count look for a counter that counts all parts going into the constraint. For automated
measurement of Total Count look for a sensor before the constraint that is triggered for all parts.
Reject Count is measured in the same place as Good Count (see above).

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Changeover Policy

Measure changeover time consistently by defining the start and end points of each event.

Document a policy for measuring Changeover Time. Three common options are:

 First Good Part is measured as the time between the last good part produced (before setup) to
the first good part produced (after setup).
 Consistent Good Parts is measured as the time between the last good part produced (before
setup) to the first instance of consistently producing parts that meet quality standards (after
setup).
 Full Speed is measured as the last good part produced at full speed (before setup) to the first
good part produced at full speed (after setup).

Stop Reasons

Stop reasons provide insights as to why the process has stopped – especially for unplanned stops.
They are an essential part of any manufacturing improvement program.

Create a starting list of stop reasons. Here are some tips:

 Start simple (10 reasons).

 Create a catch-all reason (All Other Losses).
 Make sure every reason is clear and unambiguous.
 Make sure every reason describes symptoms.
 Remove reasons that aren't regularly used.
 Add reasons if ‘All Other Losses’ is in the top ten losses.

Reasons

Improve OEE

Overview

The three most popular manufacturing improvement methodologies are Lean Manufacturing, Six
Sigma, and Theory of Constraints. OEE was developed as part of Lean Manufacturing –
specifically as part of the powerful and holistic improvement process known as TPM (Total
Productive Maintenance).

All of these methodologies have a great deal to offer for manufacturing improvement. None of
these methodologies are easy. As a result, we are often asked – is there a way to get started while
we put a comprehensive program in place? The answer is yes.

The Simplest Methodology

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This page introduces a simple and universal methodology for driving any improvement activity
and shows you how to apply it to OEE. The methodology is known as IDA (Information,
Decision, Action).

IDA
(Information, Decision, Action) is a simple and highly effective process for improving productivity using
information

IDA emphasizes three factors:

 Information: Information is the foundation and starting point of IDA. Excellent information (i.e.,
accurate, relevant, and easy-to-understand) is a precondition for effective decision making.
 Decision: Decisions are the pivot between Information and Action. It is the moment in time when
Information is reviewed and a course of Action is decided.
 Action: Action is where theoretical possibilities are transformed into tangible progress; where
Decisions are transformed into Results.

IDA is simple and universal. You may have noticed that the equation looks a lot like OEE. Three
factors are multiplied together to get an answer:

Availability × Performance × Quality = OEE

Information × Decision × Action = Result

Just like OEE, all three factors are needed to get a good result. Here’s an example. Imagine you
are a pilot and it's your job to safely fly passengers from Chicago to London. In each of the
following three scenarios there is an IDA problem that will prevent you from meeting your
objective:

 The gauges are inaccurate or broken (Information problem)

 The gauges are accurate but you don’t use them to chart your course (Decision problem)
 The gauges are accurate and you look at them; but you don't bother to make any adjustments to
the flight controls (Action problem)

Like a chain, IDA is only as strong as its weakest link. All three factors (Information, Decision,
and Action) must be present and in balance to achieve optimal results.

IDA is simple enough to be understood by all employees and broad enough to serve as a core
tool for forwarding the goals of the business. By establishing behaviors that optimize the inputs
(Information, Decision, and Action), the outputs (Results) will take care of themselves.

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Information
Information is the foundation for effective decision making. The goal is to generate accurate and
relevant data that is available to all stakeholders.

Identify the Constraint

The first step is to make sure you are collecting information at the right place in the
manufacturing process. Whether you’re filling bottles, packing boxes, stamping metal, or
assembling buses, there will always be a single step or machine that governs your throughput.
This step is the constraint.

The performance of the constraint is the performance of the entire manufacturing process,
because it’s the slowest step. To identify the constraint, look for the step that has the lowest
throughput (tip: WIP often collects around the constraint). If the line is rated to run at only one
speed, then the constraint is the equipment that does the primary work.

Capture Loss Information

The gold standard for measuring manufacturing losses is OEE, with a breakdown of OEE Losses
into the Six Big Losses, and a further breakdown of Availability Losses into Reasons.

For manufacturing processes with multiple steps, it is important to distinguish between:

 Internal Stops (the constraint is down because of something happening at the constraint)
 External Stops (the constraint is down because of something happening upstream or downstream)

By measuring losses on the constraint, and from the perspective of the constraint, you can
prioritize improvement activities on the equipment that most affects line throughput.

Decision
Decisions are the pivot between Information and Action. It is the moment in time when
Information is reviewed and a course of Action is decided. This is where we make decisions such
as:

 What will we change?

 Over what time period?
 Who will be responsible for the change?

We recommend working on two week improvement cycles. It’s long enough to make significant
changes and short enough to maintain a sense of focus and urgency.

Pick a Top Loss

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One of the fastest ways to improve is to relentlessly focus on top losses. In other words, focus
your attention on the smallest set of improvement actions that are likely to yield big results.

A top
losses report identifies the largest sources of lost production time.

Pick the largest loss where:

 Your team has ideas on actions that they can take.

 Minimal external resources are required.
 Action can be taken straightaway.

Decide Countermeasures

The next step is to select one or more countermeasures.

 Start by brainstorming. The purpose of brainstorming is to expand the world of possibilities.

Record every idea and make no judgments as to practicality. For now – every idea is a good idea.
 Finish by refining. The purpose of refining is to reduce the world of possibilities. Hone the list to
the most promising set of countermeasures that can be completed in the selected improvement
cycle timeframe (nominally two weeks).

Make sure each countermeasure is “owned” by one team member and that everyone has
committed to completing their work within the selected timeframe.

Action

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Action is where theoretical possibilities are transformed into tangible progress; where Decisions
are transformed into Results. Apply Decisions quickly and consistently to create tangible
progress.

Implement Countermeasures

This is where Actions are carried out – and change is created.

To maximize the impact of your Actions, it’s a good idea to make sure all resources are aligned
before embarking on any significant changes. For example:

 Brief and educate team members (so everyone is on the same page)
 Task-out the improvement cycle (fill in details as needed)
 Touch base with scheduling (to allocate time to work on the equipment)
 Purchase any needed materials (such as replacement parts)
 Actively lead the project (stay positive and motivated, focus on the plan, and celebrate wins along
the way)

Capture What You Learned

Each improvement cycle should end with a brief retrospective where you answer three questions:

 What went well?

 What could have gone better?
 What should we change for the future?

The answer to the last question should be captured in standardized work processes. Lock-in any
improvements by documenting them as new best practices for your manufacturing operation.

Results

When you manage the inputs (IDA), the Results take care of themselves.

It is actually very liberating to stop obsessing over Results (which are inherently backward
looking) and instead spend your time and energy on creating a process that generates Results:
Information, Decisions, and Actions.

Now publish your results. If you got the Result you wanted, celebrate successes. If you didn’t get
the Result that you wanted, re-assess how you implemented IDA to identify the weakness in your
process (Was the data accurate enough? Did you make the right decisions? Did you align the
team to focus on a single loss area? Did you complete all your agreed actions?).

What Is Overall Equipment Effectiveness (OEE)?

Overall equipment effectiveness (OEE) is the premier standard for measuring manufacturing
productivity. Read about how to calculate OEE, the six big losses, OEE benefits and more.

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What is Overall Equipment Effectiveness (OEE)?

Overall equipment effectiveness (OEE) is a term used to evaluate how efficiently a

manufacturer's operation is being used. In other words, overall equipment effectiveness helps
you notice a problem in your operations, identify which percentage of manufacturing time is
actually productive and fix it while giving you a standardized gauge for tracking progress. The
goal for measuring your OEE is continuous improvement.

How to Use Overall Equipment Effectiveness (OEE) to Measure

Manufacturing Productivity

Overall equipment effectiveness is a powerful figure. It provides a lot of information in one

number, so there are multiple ways OEE is used to measure manufacturing productivity. When
calculated and interpreted correctly, it can significantly maximize your production. Overall
equipment effectiveness is used as a benchmark to compare any given production to industry
standards, in-house equipment or other shifts working on the same piece of equipment. Standard
OEE benchmarks are as follows:

 An OEE score of 100 percent is considered perfect production, meaning you're only
manufacturing quality parts as quickly as possible with no downtime.
 An OEE score of 85 percent is considered world class for discrete manufacturers and is a sought-
after long-term goal.
 An OEE score of 60 percent is typical for discrete manufacturers and shows there is considerable
room for improvement.
 An OEE score of 40 percent is considered low but not uncommon for manufacturers just starting
to track and improve performance. In most cases, a low score can easily be improved through
easy-to-apply measures.

Overall Equipment Effectiveness is not only a great tool for managers but can have a significant
impact on employees working the plant floor. Plant floor metrics can include:

 Target - A real-time production target

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  Actual - The actual production count
 Efficiency - The ratio of target to actual; the percentage of how far ahead or behind production is
 Downtime - This includes all unplanned stoppage time for each shift and is updated in real-time.

Overall Equipment Effectiveness: Terms to Know

Before we discuss overall equipment effectiveness further, there are some important terms to be
aware of.

 Fully Productive Time - Production time after all losses are subtracted
 Planned Production Time - The total time your equipment or system is expected to produce
 Ideal Cycle Time - The time it takes to manufacture one part
 Run Time - The time your system is scheduled for production and is running
 Total Count - The total of all parts produced including those with defects
 Good Count - Parts produced that meet quality-control standards
 Good Parts - Parts produced that meet standards and don't need to be redone
 Quality - This refers to manufactured parts that don't meet quality-control standards, including
ones that need to be reworked. It is calculated as Quality = Good Count / Total Count.
 Performance - This takes into account the number of times there are slowdowns or brief stops in
production. A perfect performance score in OEE terms means your operation is running as
quickly as possible. It is calculated as Performance = (Ideal Cycle Time x Total Count) / Run
Time.
 Availability - This takes into account planned and unplanned stoppage time. A perfect
availability score means your operation is constantly running during planned production times. It
is calculated as Availability = Run Time / Planned Production Time.

How to Calculate Overall Equipment Effectiveness (OEE)

Before calculating overall equipment effectiveness, it's important to denote the difference
between the terms effectiveness and efficiency when discussing OEE.

Effectiveness is the relationship between what could technically be produced and what is actually
produced at the end of a production period. For example, if your machinery is capable of making
100 products an hour and it only makes 80, then it is 80 percent effective.

However, this doesn't tell us how efficient the machinery is because we didn't consider things
like the number of operators, energy and the materials needed to reach 80 percent effectiveness.
For example, if your machinery runs 60 percent effective with one employee and becomes 75
percent effective with two employees, the effectiveness increases by 25 percent, but efficiency
decreases to 50 percent based on labor.

There are two main ways to calculate OEE:

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  Simple Calculation: The easiest way to calculate OEE is the ratio of fully productive time to
planned production time. It looks like this: OEE = (Good Count x Ideal Cycle Time) / Planned
Production Time.
 Preferred Calculation: This type of OEE calculation is based on the three OEE factors discussed
earlier – availability, performance and quality (good count). It looks like this: Availability x
Performance x Quality = OEE. This is the preferred calculation method because not only do you
get your OEE score showing how well you're doing, but you get three numbers (availability,
performance and quality) showing what caused your losses.

Preferred Calculation Example

Below we'll look at two examples of Preferred Calculation.

Item Data

Downtime 5%

Efficiency 96%

Quality (Yield) 98%

A widget-making machine with 5 percent downtime (or 95 percent availability) has an efficiency
of 96 percent. (ASTM and other governing bodies help determine some machine efficiency
ratings. For others, it's as simple as looking at that machine's specific production.) Two of every
100 widgets the machine makes are rejected as being out of specification (98 percent quality).
Since OEE is calculated by multiplying the three factors (availability, performance and quality),
your formula looks like this: OEE = 0.95 x 0.96 x 0.98 = 89.376 percent

Let's look at a more practical example. A normal shift at a bottling facility takes 480 minutes.
Machine operators take three breaks during their shift totaling 50 minutes, and they do two
changeovers during the shift totaling 60 minutes of machine downtime for a total of 180 minutes
of lost time. To calculate the availability part of the equation, we take:

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480 minutes - 180 minutes = 300 minutes
300 minutes / 480 = 62.5 percent Availability

To calculate the performance part of the equation, let's assume the bottling plant produces 60
bottles per minute. Factoring in the remaining 300 minutes, the bottling system can make 18,000
bottles (300 x 60). Let's say the machines are running slower at 1.5 seconds of cycle time,
slowing the maximum speed by two-thirds. This reduces the actual performance to 12,000
bottles. So, to calculate the performance part of the equation, we take:

1.5 seconds per bottle = 1 / 1.5 = 2/3 = 66.7 percent Performance (66.7 percent x 18,000 bottles =
12,000 units)

To calculate the quality part of the equation, let's say out of the 12,000 bottles, 3,000 don't meet
quality-control standards, making the quality rate of the bottles 75 percent. The quality part of
the equation is calculated as:

(12,000 - 3,000 defects) / 12,000 = 75 percent Quality

Another way to look at it is 3,000 bottles / 60 bottles per minute = 50 minutes lost quality.

So, to calculate the overall equipment effectiveness (Availability x Performance x Quality =

OEE), we'd take 62.5 percent x 66.7 percent x 75 percent = 31.25 percent OEE. This means
we could technically produce 28,800 bottles, but in the end, only 9,000 bottles are cleared for
sale (9,000 / 28,800) = 31.25 percent.

What Are the Six Big Losses When It Comes to Overall Equipment
Effectiveness (OEE)?
Perhaps the biggest goal of implementing an OEE program is to reduce or eliminate the most
common causes of machine- or equipment-based productivity loss, known as the six big losses.
These six losses are broken down into the three main OEE categories (availability, performance
and quality).

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OEE Six Big Losses

Equipment Failure
Availability Loss
Setup and Adjustments

Idling and Minor Stops

Performance Loss
Reduce Speeds

Process Defects
Quality Loss
Reduced Yield

Available Losses
1. Equipment Failure: This is equipment that is not running when it is scheduled for production,
causing unplanned downtime. Machine breakdowns, unplanned maintenance stops and tooling
failure are common examples.
2. Setup and Adjustments: This is production downtime due to changeovers, machine and tooling
adjustments, planned maintenance, inspections and setup/warmup time.

Performance Losses
1. Idling and Minor Stops: Sometimes called small stops, idling and minor stops are when
equipment stops for a short period of time. This can be caused by jams, flow obstructions, wrong
settings or cleaning. These issues are usually resolved by the operator.
2. Reduced Speed: Sometimes referred to as slow cycles, reduced speed is when equipment runs at
speeds slower than the ideal cycle time (the fastest possible time). Worn out or poorly maintained
equipment due to poor lubrication practices, substandard materials and bad environmental
conditions are common causes of reduced speed.

Quality Losses
1. Process Defects: This refers to any defective part manufactured during stable production,
including scrapped parts and parts that can be reworked. Incorrect machine settings and operator
or equipment errors are common reasons for process defects.
2. Reduced Yield: Reduced yield refers to defective parts made from startup until stable production
is achieved. Like process defects, this can mean scrapped parts and parts that can be reworked.
Reduced yield most commonly occurs after changeovers, incorrect settings and during machine
warmups.

Five Benefits of Using Overall Equipment Effectiveness (OEE) to Improve

Production

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Implementing an overall equipment effectiveness strategy is a powerful advantage in achieving
your production targets. It allows you to take a proactive approach by tweaking manufacturing
processes in real time, reducing downtime, increasing capacity, reducing costs, improving
quality and increasing efficiency. Let's take a look at 10 benefits of OEE.

1. Return of Investment (ROI) for Equipment: Companies invest heavily in machinery, so it's
important to maximize the return on this investment. If you can use an OEE strategy to produce
15 percent more product on the same equipment in the same amount of time, it can greatly impact
your bottom line.
2. Increase Competitiveness: Manufacturers always strive to reduce losses during production to
achieve maximum competitiveness. Using data from an OEE report helps you identify
bottlenecks or weaknesses in production, allowing you to take immediate action.

Quality and competitiveness go hand-in-hand, and OEE's quality metric can help you identify
problems in production causing scrap or rework parts.
3. Cutting Machinery Costs: An OEE strategy helps you understand your equipment's actual
performance so you know whether it is working efficiently. It also alerts you to issues that may
lead to future breakdowns and repairs. Overall equipment effectiveness lets you anticipate
potential machine failure, reducing maintenance costs and downtime.
4. Maximize Workforce Productivity: Use OEE to see why you experience operator downtime,
reveal productivity data and pinpoint long changeovers or setup times. Information like this helps
you appropriately allot resources, identify where excess capacity is occurring and determine
where you need new hires.
5. Easily Visualize Performance: Overall equipment effectiveness emphasizes visibility, letting
you visualize production problems instead of having to rely on your best guess. By highlighting
the biggest sources of productivity losses into one single percentage, everyone can see what's
working and where improvement is needed.

Overall Equipment Effectiveness (OEE): A Case Study

Based out of Fort Collins, Colorado, New Belgium Brewing company started as a small-batch
hobby brewery and quickly became the nation's third biggest craft brewery (eighth overall) by
2012. Making popular beers such as Fat Tire amber ale, New Belgium quickly found itself
struggling to keep up with demand, especially when it came to bottling. With their brewing
operations quickly reaching capacity, New Belgium was struggling to identify efficiencies and
inefficiencies in their bottling lines. Their goals quickly shifted toward improving OEE. The
goals were as follows:

 Increase the brewery's ability take advantage of more manufacturing capabilities.

 Improve Overall Equipment Effectiveness (OEE) so quality products are being produced,
production efficiency is managed and make sure the production line is available during scheduled
downtimes, package changes and maintenance procedures.
 Operate the brewery at full capacity and double case production.

New Belgium faced a few challenges when it came to meeting their OEE goals. It didn't have
any way to view real-time information during unscheduled downtimes on various equipment,
causing slowdowns; The production team were constantly reacting to unscheduled downtime on
certain assets; and the bottling operation didn't have the ability to predict capabilities, which

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would allow them to effectively place brewery staff in certain areas to help meet specific
production goals.

Over a five-year span, the brewery implemented a series of manufacturing automation initiatives,
including an upgrade to their manufacturing automation software system to help streamline its
bottling production and figure out its maximum potential. After an audit, the brewery quickly
realized its existing lines are capable of producing 294,000 cases a week, but were only
producing 150,000 cases a week due to scheduled and unscheduled downtime.

This issue, coupled with its still archaic manual data recording process, which involved
managing paper production logs and spreadsheets, wasn't cutting it when it came to keeping up
with the level of production the brewery was facing. They realized using a software-based
system for production greatly helped in managing the various beer mixes and packaging options,
as well as accurately managing scheduled and unscheduled downtime.

Upgrading their automation system also allowed for the massive amounts of data that was being
collected to be put into context, making it easier to analyze and be turned int actionable
information. This greater visibility of the overall production picture led to a real understanding of
the actual production capacity, which helped predictable order fulfillment.

Finally, New Belgium needed a way to react more quickly to unscheduled downtime. Thanks to
the data from the upgraded software, the brewery realized it need to increase its maintenance
team by 60 percent. They added a process improvement and analysis team, educated key staff in
Kaizen processes and trained other team members in Six Sigma to react to issues more quickly.

New Belgium needed an effective way to gather, processes and analyze data to better benefit its
overall business production. It had a significant impact on the brewery's OEE:

 OEE increased from 45 to 65 percent in a little over two years.

 Downtime was decreased by over 50 percent.
 Scheduled run time efficiency increased by 25 to 30 percent.
 Production weeks broke records by producing 190,000 to 200,000 cases consistently.
 Packaging area capacity was extended to around 1.3 million barrels a year.
 The brewery maintained lower operating costs by delaying capital investments.

Overall Equipment Effectiveness (OEE) FAQs

How do I know OEE will work for my company?

Overall equipment effectiveness is common in manufacturing plants making individual parts

(discrete plants). However, it is also often used in refineries to help identify actual output.

How do I get an OEE score for my entire production line?

The best way to get an OEE score for your entire production line is to measure OEE at the piece

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of equipment or specific machine that handles the majority of the work. In non-balanced
production lines, measure OEE at the point of constraint.

Should changeover, preventative maintenance and lunches/breaks affect my OEE score?

Changeovers are part of one of the six big losses (setup and adjustment) and should be included
in OEE. Preventive maintenance and lunches/breaks will probably affect your OEE score as well
because they take away time that could be used for production. Exceptions to this include
preventive maintenance being done during a planned shutdown and if your machinery can
produce parts regardless of whether the operator is on break.

Since a world-class OEE score is 85 percent, should this be my target?

No. While 85 percent is an admirable benchmark, most manufacturers who are new to OEE kick
out an OEE score of less than 50 percent. You should set OEE goals that will show improvement
over time (usually three to five months).

What's the difference between OEE and TEEP?

Total effective equipment performance (TEEP) measures how much your operation could
manufacture if your plant ran 24 hours a day, seven days a week, while OEE measures your
productivity during planned production time.

What period of time is used to calculate OEE?

It's up to the manufacturer's discretion, but the most common period of time is one shift. Other
time frames include one job, one day or continuous monitoring.

OEE (Overall Equipment Effectiveness)

OEE measures the percentage of planned production time that is truly productive. Many manufacturing
lines are only 60% productive, meaning there are tremendous opportunities for improvement.

WHAT IS OEE?
OEE (Overall Equipment Effectiveness) is a “best practices” metric that identifies the percentage
of planned production time that is truly productive. An OEE score of 100% represents perfect
production: manufacturing only good parts, as fast as possible, with no downtime.

OEE is useful as both a benchmark and a baseline:

 As a benchmark, OEE can be used to compare the performance of a given production asset to
industry standards, to similar in-house assets, or to results for different shifts working on the same
asset.
 As a baseline, OEE can be used to track progress over time in eliminating waste from a given
production asset.

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OEE BENCHMARKS

So, as a benchmark, what is considered a “good” OEE score? What is a world-class OEE score?

 100% OEE is perfect production: manufacturing only good parts, as fast as possible, with no stop
time.
 85% OEE is considered world class for discrete manufacturers. For many companies, it is a
suitable long-term goal.
 60% OEE is fairly typical for discrete manufacturers, but indicates there is substantial room for
improvement.
 40% OEE is not at all uncommon for manufacturing companies that are just starting to track and
improve their manufacturing performance. It is a low score and in most cases can be easily
improved through straightforward measures (e.g., by tracking stop time reasons and addressing
the largest sources of downtime – one at a time).

Benchmark your OEE score against industry standards for discrete manufacturing and strive for world
class results.

SIMPLE OEE CALCULATION

So how is the OEE score calculated?

In simplest terms, OEE is the ratio of Fully Productive Time to Planned Production Time. In
practice, OEE is calculated as:

OEE = (Good Count × Ideal Cycle Time) / Planned Production Time

Let’s define some terms used in the OEE Formula:

 Good Count: pieces that are manufactured without any defects

 Ideal Cycle Time: the theoretical fastest possible time to manufacture one piece
 Planned Production Time: the total time that the production asset is scheduled for production
Fully

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WHAT IS THE THEORY OF CONSTRAINTS?

The Theory of Constraints is a methodology for identifying the most important limiting factor
(i.e., constraint) that stands in the way of achieving a goal and then systematically improving that
constraint until it is no longer the limiting factor. In manufacturing, the constraint is often
referred to as a bottleneck.

The Theory of Constraints takes a scientific approach to improvement. It hypothesizes that every
complex system, including manufacturing processes, consists of multiple linked activities, one of
which acts as a constraint upon the entire system (i.e., the constraint activity is the “weakest link
in the chain”).

So what is the ultimate goal of most manufacturing companies? To make a profit – both in the
short term and in the long term. The Theory of Constraints provides a powerful set of tools for
helping to achieve that goal, including:

 The Five Focusing Steps: a methodology for identifying and eliminating constraints
 The Thinking Processes: tools for analyzing and resolving problems
 Throughput Accounting: a method for measuring performance and guiding
management decisions

Dr. Eliyahu Goldratt conceived the Theory of Constraints (TOC), and introduced it to a wide
audience through his bestselling 1984 novel, “The Goal”. Since then, TOC has continued to
evolve and develop, and today it is a significant factor within the world of management best
practices.

One of the appealing characteristics of the Theory of Constraints is that it inherently prioritizes
improvement activities. The top priority is always the current constraint. In environments where
there is an urgent need to improve, TOC offers a highly focused methodology for creating rapid
improvement.

A successful Theory of Constraints implementation will have the following benefits:

 Increased Profit: the primary goal of TOC for most companies

 Fast Improvement: a result of focusing all attention on one critical area – the system
constraint
 Improved Capacity: optimizing the constraint enables more product to be manufactured
 Reduced Lead Times: optimizing the constraint results in smoother and faster product
flow
 Reduced Inventory: eliminating bottlenecks means there will be less work-in-process

BASICS OF TOC - Core Concept

The core concept of the Theory of Constraints is that every process has a single constraint and
that total process throughput can only be improved when the constraint is improved. A very

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important corollary to this is that spending time optimizing non-constraints will not provide
significant benefits; only improvements to the constraint will further the goal (achieving more
profit).

Thus, TOC seeks to provide precise and sustained focus on improving the current constraint until
it no longer limits throughput, at which point the focus moves to the next constraint. The
underlying power of TOC flows from its ability to generate a tremendously strong focus towards
a single goal (profit) and to removing the principal impediment (the constraint) to achieving
more of that goal. In fact, Goldratt considers focus to be the essence of TOC.

The Five Focusing Steps

The Theory of Constraints provides a specific methodology for identifying and eliminating
constraints, referred to as the Five Focusing Steps. As shown in the following diagram, it is a
cyclical process.

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The Theory of Constraints uses a process known as the Five Focusing Steps to identify and
eliminate constraints (i.e., bottlenecks).

The Five Focusing Steps are further described in the following table.

Step Objective
Identify the current constraint (the single part of the process that limits the rate at
Identify
which the goal is achieved).
Make quick improvements to the throughput of the constraint using existing
Exploit
resources (i.e., make the most of what you have).
Review all other activities in the process to ensure that they are aligned with and
Subordinate
truly support the needs of the constraint.
If the constraint still exists (i.e., it has not moved), consider what further actions can
be taken to eliminate it from being the constraint. Normally, actions are continued at
Elevate
this step until the constraint has been “broken” (until it has moved somewhere else).
In some cases, capital investment may be required.

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Step Objective
The Five Focusing Steps are a continuous improvement cycle. Therefore, once a
constraint is resolved the next constraint should immediately be addressed. This step
Repeat
is a reminder to never become complacent – aggressively improve the current
constraint…and then immediately move on to the next constraint.

The Thinking Processes

The Theory of Constraints includes a sophisticated problem solving methodology called the
Thinking Processes. The Thinking Processes are optimized for complex systems with many
interdependencies (e.g., manufacturing lines). They are designed as scientific “cause and effect”
tools, which strive to first identify the root causes of undesirable effects (referred to as UDEs),
and then remove the UDEs without creating new ones.

The Thinking Processes are used to answer the following three questions, which are essential to
TOC:

 What needs to be changed?

 What should it be changed to?
 What actions will cause the change?

Examples of tools that have been formalized as part of the Thinking Processes include:

Tool Role Description

Diagram that shows the current state, which is unsatisfactory
Current Documents the and needs improvement. When creating the diagram, UDEs
Reality Tree current state. (symptoms of the problem) are identified and traced back to
their root cause (the underlying problem).
Diagram that helps to identify specific changes (called
injections) that eliminate UDEs. It is particularly useful for
Evaporating Evaluates potential
resolving conflicts between different approaches to solving a
Cloud Tree improvements.
problem. It is used as part of the process for progressing from
the Current Reality Tree to the Future Reality Tree.
Diagram that shows the future state, which reflects the results
Future Reality Documents the
of injecting changes into the system that are designed to
Tree future state.
eliminate UDEs.
Diagram that shows an implementation plan for achieving the
Provides an action future state. Creates a logical structure that organizes
Strategy and
plan for knowledge and derives tactics from strategy. Note: this tool is
Tactics Tree
improvement. intended to replace the formerly used Prerequisite Tree in the
Thinking Processes.

Throughput Accounting

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Throughput Accounting is an alternative accounting methodology that attempts to eliminate
harmful distortions introduced from traditional accounting practices – distortions that promote
behaviors contrary to the goal of increasing profit in the long term.

In traditional accounting, inventory is an asset (in theory, it can be converted to cash by selling
it). This often drives undesirable behavior at companies – manufacturing items that are not truly
needed. Accumulating inventory inflates assets and generates a “paper profit” based on inventory
that may or may not ever be sold (e.g., due to obsolescence) and that incurs cost as it sits in
storage. The Theory of Constraints, on the other hand, considers inventory to be a liability –
inventory ties up cash that could be used more productively elsewhere.

“The Theory of Constraints, on the other hand, considers inventory to be a liability – inventory
ties up cash that could be used more productively elsewhere.

In traditional accounting, there is also a very strong emphasis on cutting expenses. The Theory of
Constraints, on the other hand, considers cutting expenses to be of much less importance than
increasing throughput. Cutting expenses is limited by reaching zero expenses, whereas
increasing throughput has no such limitations.

These and other conflicts result in the Theory of Constraints emphasizing Throughput
Accounting, which uses as its core measures: Throughput, Investment, and Operating Expense.

Core
Definition
Measures
The rate at which customer sales are generated less truly variable costs (typically
Throughput raw materials, sales commissions, and freight). Labor is not considered a truly
variable cost unless pay is 100% tied to pieces produced.
Money that is tied up in physical things: product inventory, machinery and
Investment
equipment, real estate, etc. Formerly referred to in TOC as Inventory.
Operating Money spent to create throughput, other than truly variable costs (e.g., payroll,
Expense utilities, taxes, etc.). The cost of maintaining a given level of capacity.

In addition, Throughput Accounting has four key derived measures: Net Profit, Return on
Investment, Productivity, and Investment Turns.

Net Profit = Throughput − Operating Expenses

Return on Investment = Net Profit / Investment

Productivity = Throughput / Operating Expenses

Investment Turns = Throughput / Investment

In general, management decisions are guided by their effect on achieving the following
improvements (in order of priority):

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  Will Throughput be increased?
 Will Investment be reduced?
 Will Operating Expenses be reduced?

The strongest emphasis (by far) is on increasing Throughput. In essence, TOC is saying to focus
less on cutting expenses (Investment and Operating Expenses) and focus more on building sales
(Throughput).

Drum-Buffer-Rope

Drum-Buffer-Rope (DBR) is a method of synchronizing production to the constraint while

minimizing inventory and work-in-process.

The “Drum” is the constraint. The speed at which the constraint runs sets the “beat” for the
process and determines total throughput.

The “Buffer” is the level of inventory needed to maintain consistent production. It ensures that
brief interruptions and fluctuations in non-constraints do not affect the constraint. Buffers
represent time; the amount of time (usually measured in hours) that work-in-process should
arrive in advance of being used to ensure steady operation of the protected resource. The more
variation there is in the process the larger the buffers need to be. An alternative to large buffer
inventories is sprint capacity (intentional overcapacity) at non-constraints. Typically, there are
two buffers:

 Constraint Buffer: immediately before the constraint; protects the constraint

 Customer Buffer: at the very end of the process; protects the shipping schedule

The “Rope” is a signal generated by the constraint indicating that some amount of inventory has
been consumed. This in turn triggers an identically sized release of inventory into the process.
The role of the rope is to maintain throughput without creating an accumulation of excess
inventory.

THE NATURE OF CONSTRAINTS

What are Constraints?

Constraints are anything that prevents the organization from making progress towards its goal. In
manufacturing processes, constraints are often referred to as bottlenecks. Interestingly,
constraints can take many forms other than equipment. There are differing opinions on how to
best categorize constraints; a common approach is shown in the following table.

Constraint Description
Typically equipment, but can also be other tangible items, such as material
Physical
shortages, lack of people, or lack of space.
Policy Required or recommended ways of working. May be informal (e.g., described to

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Constraint Description
new employees as “how things are done here”). Examples include company
procedures (e.g., how lot sizes are calculated, bonus plans, overtime policy), union
contracts (e.g., a contract that prohibits cross-training), or government regulations
(e.g., mandated breaks).
Deeply engrained beliefs or habits. For example, the belief that “we must always
Paradigm keep our equipment running to lower the manufacturing cost per piece”. A close
relative of the policy constraint.
Occurs when production capacity exceeds sales (the external marketplace is
Market constraining throughput). If there is an effective ongoing application of the Theory
of Constraints, eventually the constraint is likely to move to the marketplace.

There are also differing opinions on whether a system can have more than one constraint. The
conventional wisdom is that most systems have one constraint, and occasionally a system may
have two or three constraints.

In manufacturing plants where a mix of products is produced, it is possible for each product to
take a unique manufacturing path and the constraint may “move” depending on the path taken.
This environment can be modeled as multiple systems – one for each unique manufacturing path.

Policy Constraints

Policy constraints deserve special mention. It may come as a surprise that the most common
form of constraint (by far) is the policy constraint.

Since policy constraints often stem from long-established and widely accepted policies, they can
be particularly difficult to identify and even harder to overcome. It is typically much easier for an
external party to identify policy constraints, since an external party is less likely to take existing
policies for granted.

When a policy constraint is associated with a firmly entrenched paradigm (e.g., “we must always
keep our equipment running to lower the manufacturing cost per piece”), a significant investment
in training and coaching is likely to be required to change the paradigm and eliminate the
constraint.

Policy constraints are not addressed through application of the Five Focusing Steps. Instead, the
three questions discussed earlier in the Thinking Processes section are applied:

 What needs to be changed?

 What should it be changed to?
 What actions will cause the change?

The Thinking Processes are designed to effectively work through these questions and resolve
conflicts that may arise from changing existing policies.

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TOC Example

An excellent way to deepen your understanding of the Theory of Constraints is to walk through a
simple implementation example. In this example, the Five Focusing Steps are used to identify
and eliminate an equipment constraint (i.e., bottleneck) in the manufacturing process.

Step One – Identify the Constraint

In this step, the manufacturing process is reviewed to identify the constraint. A simple but often
effective technique is to literally walk through the manufacturing process looking for indications
of the constraint.

Item Description
Look for large accumulations of work-in-process on the plant floor. Inventory often
WIP
accumulates immediately before the constraint.
Look for areas where process expeditors are frequently involved. Special attention and
Expedite handholding are often needed at the constraint to ensure that critical orders are
completed on time.
Review equipment performance data to determine which equipment has the longest
average cycle time. Adjust out time where the equipment is not operating due to
Cycle
external factors, such as being starved by an upstream process or blocked by a
Time
downstream process. Although such time affects throughput, the time loss is usually
not caused or controlled by the starved/blocked equipment.
Ask operators where they think equipment is not keeping up with demand. Pay close
Demand
attention to these areas, but also look for other supporting indicators.

The deliverable for this step is the identification of the single piece of equipment that is
constraining process throughput.

Step Two – Exploit the Constraint

In this step, the objective is to make the most of what you have – maximize throughput of the
constraint using currently available resources. The line between exploiting the constraint (this
step) and elevating the constraint (the fourth step) is not always clear. This step focuses on quick
wins and rapid relief; leaving more complex and substantive changes for later.

Item Description
Create a suitably sized inventory buffer immediately in front of the constraint to
Buffer
ensure that it can keep operating even if an upstream process stops.
Check quality immediately before the constraint so only known good parts are
Quality
processed by the constraint.
Ensure that the constraint is continuously scheduled for operation (e.g., operate
Continuous
the constraint during breaks, approve overtime, schedule fewer changeovers,
Operation
cross-train employees to ensure there are always skilled employees available for

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Item Description
operating the constraint).
Move routine maintenance activities outside of constraint production time (e.g.,
Maintenance
during changeovers).
Offload Offload some constraint work to other machines. Even if they are less efficient,
(Internal) the improved system throughput is likely to improve overall profitability.
Offload Offload some work to other companies. This should be a last resort if other
(External) techniques are not sufficient to relieve the constraint.

The deliverable for this step is improved utilization of the constraint, which in turn will result in
improved throughput for the process. If the actions taken in this step “break” the constraint (i.e.,
the constraint moves) jump ahead to Step Five. Otherwise, continue to Step Three.

Step Three – Subordinate and Synchronize to the Constraint

In this step, the focus is on non-constraint equipment. The primary objective is to support the
needs of the constraint (i.e., subordinate to the constraint). Efficiency of non-constraint
equipment is a secondary concern as long as constraint operation is not adversely impacted.

By definition, all non-constraint equipment has some degree of excess capacity. This excess
capacity is a virtue, as it enables smoother operation of the constraint. The manufacturing
process is purposely unbalanced:

Item Description
Upstream equipment has excess capacity that ensures that the constraint buffer is
Upstream continuously filled (but not overfilled) so that the constraint is never “starved” by
the upstream process.
Downstream equipment has excess capacity that ensures that material from the
Downstream constraint is continually processed so the constraint is never “blocked” by the
downstream process.

Some useful techniques for this step include:

Item Description
Implement DBR (Drum-Buffer-Rope) on the constraint as a way of synchronizing
DBR
the manufacturing process to the needs of the constraint.
Subordinate maintenance to the constraint by ensuring that the constraint is always
Priority
the highest priority for maintenance calls.
Add sprint capacity to non-constraint equipment to ensure that interruptions to their
Sprint operation (e.g., breakdowns or material changes) can quickly be offset by faster
operation and additional output.
Steady Operate non-constraint equipment at a steady pace to minimize stops. Frequent
Operation inertial changes (i.e., stops and speed changes) can increase wear and result in

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Item Description
breakdowns.

The deliverable for this step is fewer instances of constraint operation being stopped by upstream
or downstream equipment, which in turn results in improved throughput for the process. If the
actions taken in this step “break” the constraint (i.e., the constraint moves) jump ahead to Step
Five. Otherwise, continue to Step Four.

Step Four – Elevate Performance of the Constraint

In this step, more substantive changes are implemented to “break” the constraint. These changes
may necessitate a significant investment of time and/or money (e.g., adding equipment or hiring
more staff). The key is to ensure that all such investments are evaluated for effectiveness
(preferably using Throughput Accounting metrics).

Item Description
Use performance data (e.g., Overall Equipment Effectiveness metrics plus
Performance Data downtime analytics) to identify the largest sources of lost productive time at
the constraint.
Target the largest sources of lost productive time, one-by-one, with cross-
Top Losses
functional teams.
Implement ongoing plant floor reviews within shifts (a technique called Short
Reviews Interval Control) to identify tactical actions that will improve constraint
performance.
Implement a setup reduction program to reduce the amount of productive time
Setup Reduction
lost to changeovers.
Evaluate the constraint for potential design updates and/or component
Updates/Upgrades
upgrades.
Equipment Purchase additional equipment to supplement the constraint (a last resort).

The deliverable for this step is a significant enough performance improvement to break the
constraint (i.e., move the constraint elsewhere).

Step Five – Repeat the Process

In this step, the objective is to ensure that the Five Focusing Steps are not implemented as a one-
off improvement project. Instead, they should be implemented as a continuous improvement
process.

Item Description
If the constraint has been broken (the normal case), recognize that there is a new
Constraint
constraint. Finding and eliminating the new constraint is the new priority (restart
Broken
at Step One).

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Item Description
If the constraint has not been broken, recognize that more work is required, and a
Constraint Not
fresh look needs to be taken, including verifying that the constraint has been
Broken
correctly identified (restart at Step One).

This step also includes a caution…beware of inertia. Remain vigilant and ensure that
improvement is ongoing and continuous. The Five Focusing Steps are kind of like “Whac-A-
Mole”…pound one constraint down and then move right on to the next!

INTEGRATING WITH LEAN

Contrasting Theory of Constraints and Lean Manufacturing

The Theory of Constraints and Lean Manufacturing are both systematic methods for improving
manufacturing effectiveness. However, they have very different approaches:

 The Theory of Constraints focuses on identifying and removing constraints that limit
throughput. Therefore, successful application tends to increase manufacturing capacity.
 Lean Manufacturing focuses on eliminating waste from the manufacturing process.
Therefore, successful application tends to reduce manufacturing costs.

Both methodologies have a strong customer focus and are capable of transforming companies to
be faster, stronger, and more agile. Nonetheless, there are significant differences, as highlighted
in the following table.

What? Theory of Constraints Lean Manufacturing

Objective Increase throughput. Eliminate waste.
Singular focus on the constraint (until it Broad focus on the elimination of waste
Focus
is no longer the constraint). from the manufacturing process.
Result Increased manufacturing capacity. Reduced manufacturing cost.
Maintain sufficient inventory to
Inventory Eliminate virtually all inventory.
maximize throughput at the constraint.
Line Create imbalance to maximize Create balance to eliminate waste (excess
Balancing throughput at the constraint. capacity).
Constraint sets the pace (Drum-Buffer-
Pacing Customer sets the pace (Takt Time).
Rope).

From the perspective of the Theory of Constraints, it is more practical and less expensive to
maintain a degree of excess capacity for non-constraints (i.e., an intentionally unbalanced line)
than to try to eliminate all sources of variation (which is necessary to efficiently operate a
balanced line). Eliminating variation is still desirable in TOC; it is simply given less attention
than improving throughput.

Combining Theory of Constraints and Lean Manufacturing

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One of the most powerful aspects of the Theory of Constraints is its laser-like focus on
improving the constraint. While Lean Manufacturing can be focused, more typically it is
implemented as a broad-spectrum tool.

In the real world, there is always a need to compromise, since all companies have finite
resources. Not every aspect of every process is truly worth optimizing, and not all waste is truly
worth eliminating. In this light, the Theory of Constraints can serve as a highly effective
mechanism for prioritizing improvement projects, while Lean Manufacturing can provide a rich
toolbox of improvement techniques. The result – manufacturing effectiveness is significantly
increased by eliminating waste from the parts of the system that are the largest constraints on
opportunity and profitability.

While Lean Manufacturing tools and techniques are primarily applied to the constraint, they can
also be applied to equipment that is subordinated to the constraint (e.g., to equipment that starves
or blocks the constraint; to post-constraint equipment that causes quality losses).

The remainder of this section describes how to apply a range of Lean Manufacturing tools and
techniques to the Five Focusing Steps.

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The Five Focusing Steps of the Theory of Constraints can utilize established lean manufacturing
tools as shown in the above diagram.

Applying Lean Tools to “Identify the Constraint”

Lean Manufacturing provides an excellent tool for visually mapping the flow of production
(Value Stream Mapping) as well as a philosophy that promotes spending time on the plant floor
(Gemba).

Lean Tool Description

Value Stream Mapping (VSM) visually maps the flow of production (current and
future states) using a defined set of symbols and techniques.
Value
Stream
 Provides a foundation from which to work when identifying the constraint.
Mapping
For example, the cycle time of each stage can be marked on the map.
 Engages teams and useful for problem solving exercises.

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Lean Tool Description
 Helpful for documenting complex processes.

Gemba encourages leaving the office to spend time on the plant floor. This
promotes a deep and thorough understanding of real-world manufacturing issues –
by first-hand observation and by talking with plant floor employees.
Gemba
 Walking the plant floor, observing production, and interacting with
employees can be a very effective way to gather information that helps
identify the constraint.

Applying Lean Tools to “Exploit the Constraint”

Lean Manufacturing strongly supports the idea of making the most of what you have, which is
also the underlying theme for exploiting the constraint. For example, lean teaches to organize the
work area (5S), to motivate and empower employees (Visual Factory/Andon), to capture best
practices (Standardized Work), and to brainstorm incremental ideas for improvement (Kaizen).

Lean Tool Description

5S is a program for eliminating the waste that results from a poorly organized
work area. It consists of five elements: Sort (eliminate that which is not needed),
Straighten (organize the remaining items), Shine (clean and inspect the area),
Standardize (create standards for 5S), and Sustain (consistently apply the
standards).
5S
 Creates a foundation for better performance at the constraint.
 Enables faster identification of emerging issues at the constraint.
 Results in increased motivation and pride (from the improved work
environment).

Visual Factory is a strategy for conveying information through easily seen plant
floor visuals. Andons are visual displays that indicate production status and
enable operators to bring immediate attention to problems – so they can be
instantly addressed.

 Displays constraint production metrics in real time – a powerful

Visual Factory motivator.
/ Andon  Reduces reaction time to stoppages by instantly alerting operators to
intervene.
 Empowers operators to call immediate attention to problems at the
constraint.
 Increases focus by using visuals to reinforce the importance of the
constraint.

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Lean Tool Description
Standardized Work captures best practices in work area documents that are
consistently applied by all operators and that are kept up-to-date with the current
best practices.
Standardized
 Improves throughput by consistently applying best practices at the
Work
constraint.
 Reduces variation by applying standardized procedures at the constraint.
 Ensures that all operators setup and run the constraint in a repeatable way.

Kaizen provides a framework for employees to work in small groups that suggest
and implement incremental improvements for the manufacturing process. It
combines the collective talents of a company to create an engine for continuous
improvement.

 Provides a proven mechanism for generating ideas on how to exploit the

Kaizen
constraint.
 Identifies “quick win” opportunities for improving throughput of the
constraint.
 Engages operators to work as a team and to think critically about their
work.

Applying Lean Tools to “Subordinate to the Constraint”

Lean Manufacturing techniques for regulating flow (Kanban) and synchronizing automated lines
(Line Control) can be applied towards subordinating and synchronizing to the constraint.

Lean
Description
Tool
Kanban is a method for regulating the flow of materials, which provides for automatic
replenishment through signal cards that indicate when more materials are needed.

 Offers simple visual techniques for controlling the flow of materials.

Kanban
 Synchronizes material usage at the constraint with material usage in the
upstream process by controlling when new materials are released into the
process.

Line Control is a sophisticated technique used with synchronous automated lines, such
as FMCG (Fast Moving Consumer Goods) lines, which slaves non-constraint
equipment to the constraint in such a way as to increase overall system throughput.
Line
Control
 Provides an effective alternative to traditional Drum-Buffer-Rope for FMCG
lines.
 Optimizes constraint and non-constraint running speeds to maximize

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Lean
Description
Tool
throughput and reduce the frequency of minor stops.
 Reduces startup delays on the constraint by synchronizing equipment startup.

Applying Lean Tools to “Elevate the Constraint”

Lean Manufacturing techniques for proactively maintaining equipment (TPM), dramatically

reducing changeover times (SMED), building defect detection and prevention into production
processes (Poka-Yoke), and partially automating equipment (Jidoka) all have direct application
when elevating the constraint. TPM and SMED can also be viewed as exploitation techniques
(maximizing throughput using currently available resources); however, they are fairly complex
and are likely to benefit from working with outside experts.

Lean
Description
Tool
TPM (Total Productive Maintenance) offers a holistic approach to maintenance that
focuses on proactive and preventative maintenance to maximize the operational time of
the constraint (increasing up time, reducing cycle times, and eliminating defects).

TPM  Reduces the frequency of constraint breakdowns and minor stops.

 Provides operators with a stronger feeling of “ownership” for their equipment.
 Enables most maintenance to be planned and scheduled for non-production time.
 Targets quality issues by finding and removing the root causes of defects.

SMED (Single-Minute Exchange of Die) is a method for dramatically reducing

changeover time at the constraint. As many steps as possible are converted to external
(performed while the process is running) and remaining steps are streamlined (e.g., bolts
and manual adjustments are eliminated).

SMED  Increases usable production time at the constraint.

 Enables smaller lot sizes, resulting in improved responsiveness to customer
demand.
 Enables smoother startups, since a simplified and standardized changeover
process improves quality and consistency.

Poka-Yoke (also referred to as “mistake proofing”) designs defect detection and

prevention into equipment with the goal of achieving zero defects.
Poka-
Yoke  Reduces the number of defects (which is also very important post-constraint).
 Enables the operator to spend more time on Autonomous Maintenance.

Jidoka Jidoka means “intelligent automation” or “automation with a human touch”. It

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Lean
Description
Tool
recognizes that partial automation is significantly less expensive than full automation.
Jidoka also emphasizes automatic stoppage of equipment when defects are detected.

 In some cases, the constraint cannot be broken without significant capital

investment. Jidoka can provide valuable guidance on equipment design and
upgrades.

Six Big Losses

One of the major goals of TPM and OEE programs is to reduce and/or eliminate what are called
the Six Big Losses – the most common causes of equipment-based productivity loss in
manufacturing.

First, let’s define the Six Big Losses.

Capture the Six Big Losses to gain additional actionable insight to the OEE Factors of Availability,
Performance, and Quality.

Equipment Failure

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Equipment Failure accounts for any significant period of time in which equipment is scheduled
for production but is not running due a failure of some sort. A more generalized way to think of
equipment failure is as any unplanned stop or downtime. Equipment failure is an Availability
Loss.

Examples of common reasons for equipment failure include tooling failure, breakdowns, and
unplanned maintenance. From the broader perspective of unplanned stops, other common
reasons include no operators or materials, being starved by upstream equipment or being blocked
by downstream equipment.

There is flexibility on where to set the threshold between equipment failure (an Availability
Loss) and a minor stop (a Performance Loss). A good rule of thumb is to set that threshold based
on your policy for tracking reasons. For example, your policy might be that any downtime longer
than two minutes should have a reason associated with it – and thus shall be considered
equipment failure.

Setup and Adjustments

Setup and Adjustments accounts for any significant periods of time in which equipment is
scheduled for production but is not running due to a changeover or other equipment adjustment.
A more generalized way to think of Setups & Adjustments is as any planned stop. Setup and
Adjustments is an Availability Loss.

Examples of common reasons for Setup and Adjustments include setup, changeovers, major
adjustments, and tooling adjustments. From the broader perspective of planned stops, other
common reasons include cleaning, warmup time, planned maintenance, and quality inspections.

The largest source of Setup and Adjustment time is typically changeovers (also referred to as
make ready or setup), which can be addressed through a SMED (Single-Minute Exchange of
Dies) program.

Idling and Minor Stops

Idling and Minor Stops accounts for time where the equipment stops for a short period of time
(typically a minute or two) with the stop resolved by the operator. Another name for Idling and
Minor Stops is small stops. Idling and Minor Stops is a Performance Loss.

Examples of common reasons for Idling and Minor Stops include misfeeds, material jams,
obstructed product flow, incorrect settings, misaligned or blocked sensors, equipment design
issues, and periodic quick cleaning.

This category usually includes stops that are well under five minutes and that do not require
maintenance personnel. The underlying problems are often chronic (same problem/different
day), which can make operators somewhat blind to their impact. Most companies do not
accurately track Idling and Minor Stops.

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Reduced Speed
Reduced Speed accounts for time where equipment runs slower than the Ideal Cycle Time (the
theoretical fastest possible time to manufacture one part). Another name for reduced speed is
slow cycles. Reduced speed is a Performance Loss.

Examples of common reasons for reduced speed include dirty or worn out equipment, poor
lubrication, substandard materials, poor environmental conditions, operator inexperience, startup,
and shutdown.

This category includes anything that keeps the process from running at its theoretical maximum
speed (a.k.a. Ideal Run Rate or Nameplate Capacity) when the manufacturing process is actually
running.

Process Defects
Process Defects account for defective parts produced during stable (steady-state) production.
This includes scrapped parts as well as parts that can be reworked, since OEE measures quality
from a First Pass Yield perspective. Process defects are a Quality Loss.

Examples of common reasons for process defects include incorrect equipment settings, operator
or equipment handling errors, and lot expiration (e.g., in pharmaceutical plants).

Reduced Yield
Reduced Yield accounts for defective parts produced from startup until stable (steady-state)
production is reached. This includes scrapped parts as well as parts that can be reworked, since
OEE measures quality from a First Pass Yield perspective. Reduced Yield can occur after any
equipment startup, however, it is most commonly tracked after changeovers. Reduced Yield is a
Quality Loss.

Examples of common reasons for Reduced Yield include suboptimal changeovers, incorrect
settings when a new part is run, equipment that needs warmup cycles, or equipment that
inherently creates waste after startup (e.g., a web press).

The Core 5 Principles for Lean Implementation

Lean has proven to be an effective model for managing teams in some of the most demanding
industries, like software development, manufacturing, construction, and many others.

A huge role in this has the fact that the methodology is simple to understand and quick to make
an impact when implemented properly.

Like everything else in life, the first steps in Lean management are the most difficult, and a huge
portion of the teams that fail to implement it successfully give up early on.
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Prepare Your Team for the Change
Although Lean management is based on the 5 principles of Lean, before applying them, you
need to prepare your team, department, and even the whole organization for the change.

Set clear goals

First of all, you need to know what your end goal is and communicate that with everybody on
your team. What are you trying to achieve by implementing the Lean process within your
company?

Is it optimization of your workflow so you can have faster product deliveries? Are you trying to
increase your overall business profitability as a result of it? Or perhaps, you want to ensure your
business’s survivability by making it more sustainable in the future?

Whatever that goal is, it needs to be clearly defined. This way, you will be able to share a path to
achieve it, motivate people to take the journey with you, and assist them by removing any
obstacles that appear on your way to process perfection.

Establish a Lean mindset

Once you know the implementation's outcome, you need to integrate the Lean mindset within
your team.

Dealing with the human factor and getting everybody on board might be a major challenge.
That’s why, to get started, you need to explain to your team members what Lean is and make
sure they understand its benefits not just from an organizational perspective but from a personal
one too.

The Lean process is about delivering superior customer value by eliminating waste and
cultivating an environment of shared leadership where your team members receive more
responsibilities and seek continuous improvement. Once your colleagues understand that, they
will be more likely to embrace the change.

Start Small and Find a Change Agent

A good practice is to start with a single team and later spread the Lean practices across
departments, eventually transforming your whole company into a Lean organization.

If you are working at an enterprise-level, you should form a temporary pilot group of members
of different teams so they could serve as change agents after they return to their original
teammates.

For example, if you have a large RnD department that consists of multiple teams working
independently, you should ask for volunteers from each team.

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A good way to ensure that they will be fitting change agents is to select only people who are not
only enthusiastic but are influential in their teams (e.g., senior members, informal leaders, etc.).
Once you set the strong foundation, introduce the 5 principles of Lean management.

Introduce the Lean Management Principles

After you’ve prepared your team for the change, you need to take specific actions (“Lean
activities”) to apply each of the 5 principles of Lean.

Nonetheless, you have the responsibility to enlighten your team and help them understand why
each one of the Lean principles is important with the goal of eventually embracing them as a
culture.

1. Identify Value

After you’ve prepared your team for the change, to lay the foundations of a Lean process, you
need to first identify the team’s work value. You need to distinguish the value-adding from waste
activities.

It is crucial for everybody to be on the same page about it, so this should be a collective
activity.

To understand what value is, consider the end product of your efforts and what your customer
gets from it. By definition, value is everything that your customer is paying you for.

However, some teams are not producing a direct value for the company's customer but are
enhancing the overall value that the organization delivers (e.g., QA teams).

In this case, the customer is your company. For example, the value of a quality assurance team’s
work is the number of bugs they catch and therefore ensure that the whole company will deliver
a product of value to the end-user.

Lean identifies 7 types of waste. Waste activities can be categorized as pure and necessary.

The main difference between them is that some waste activities are necessary to support the
value-adding ones while pure waste activities only bring harm to the Lean flow of work.

Going back to the software development example, quality assurance is the brightest example of a
necessary waste. It doesn’t generate direct value for the end customer, but it ensures the
development process's value doesn’t get lost.

2. Map Value Stream

The second of the 5 principles of Lean is all about the stream of value.

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That's why, after you’ve identified the value that your team produces, it is important to visualize
its path to the customer. In Lean management, this is usually done with the help of Kanban
boards.

The Kanban board is a tool for mapping every step of your process and, therefore, visualizing
your team's value stream.

Developed as part of the Toyota production system, which laid the foundations of Lean
management, the basic Kanban board is a vertical flat surface divided by columns for the three
primary states of any assignment:

• Requested
• In progress
• Done

Although visualizing your workflow this way is a good start, you should consider mapping your
process more precisely by including the steps that compose each stage.

For example, a "Requested" stage may have two steps – order received and ready to start.
Usually, "In progress" consists of the greatest number of steps.

In the software development context, you would normally have steps like tech design,
development, testing, and at least a couple of review stages.

When mapping your value stream for the first time, you should focus on value-adding steps to
create a Lean process. Be sure to correct it occasionally as your process evolves.

3. Create Flow

In the world of Lean, flow is a key concept. Since any kind of waiting is a waste, when creating a
flow of value, your goal is to ensure smooth delivery from the second you receive an order to the
moment when you deliver it to the customer.

A major impediment to creating a smooth flow are the bottlenecks in your process. As a
manager, you should be watchful of how tasks progress through your workflow. Keep an
especially close eye on where tasks get stuck so you can look to understand why that
happens. Bottlenecks may be caused by lack of capacity at a certain stage, waiting on external
stakeholders, etc.

Among the most common bottlenecks in any process are the review stages because most of the
time, the people reviewing work items are fewer than those that submit it, and often, the
reviewers become overwhelmed.

Alleviating the bottlenecks in your process is crucial for the creation of a smooth and Lean flow.
If you can’t alleviate them, at least be sure to protect any existing ones from getting clogged.

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A simple way to do it is to limit the amount of work that your team can have in progress
simultaneously. Having this in mind, you should have a discussion with your team on the topic
and agree on acceptable WIP limits to help them achieve maximum efficiency.

Ensure that they understand how harmful multitasking can be to their productivity and
experiment with different limits until you achieve a smooth flow of tasks.

4. Establish Pull

After you have created a flow of work, the 4th of the Lean principles asks us to establish a pull
system. The idea is simple, start new work only when there is a demand for it and your team has
spare capacity. Your goal should be to produce the value that is actually needed by your
customers and avoid overproduction.

To visualize it clearly, let’s look at how assignments are processed in a pull system versus the
typical push model.

In a push system, a task is created and then assigned to a developer. Someone, usually some kind
of manager or team leader, takes the units of work that need to be done and then allocates them
to the team members. Simply, work is pushed onto the people who will be doing it.

In a pull system, the tasks that must be processed are stored in a queue. A developer who is
currently not working on anything will go to the queue and take the item with the highest priority
that they are able to work on. The people who are doing the work pull the assignments and start
processing them.

As a Lean organization, your goal is to deliver value to your customers in the most efficient
manner. A good way to ensure that is focusing on two key metrics of each task:

 Cycle time
 Throughout

The cycle time of your tasks is the time your team is actively working towards their completion,
while throughput is the number of tasks that you finish in a predefined time frame.

As a leader looking to implement Lean principles and practices, you should aim for shorter cycle
times resulting in an increased throughput of your team.

5. Seek Constant Improvement

This Lean principle is closely related to the concept of continuous improvement, which is an
integral part of Lean management.

Your goal is to constantly improve every process in your team by focusing on enhancing the
activities that generate the most value for your customer while removing as many waste activities
as possible.

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Continuous improvement can be achieved with the help of methods such as Plan-Do-Check-Act,
known as PDCA but is more of a mindset that you have to inspire in your team.

To help your team achieve continuous improvement, you should consider the way you lead them.

If you are among the traditional managers that prefer to be in control of every single activity and
micromanage even the execution of small tasks, you may have to embrace a change to your style
and implement a shared leadership model.

Continuous improvement can only blossom if every person on your team takes ownership of
their tasks. This can prove difficult when they can’t even handle the smallest issues on their own.

Place more trust in their expertise and increase their independence in time according to their
performance.

Of course, this doesn’t mean that you should let your team members run loose. That's why a
great Lean/Agile practices to implement is the daily stand-up meeting where you can keep them
accountable.

There, every person explains what they’ve done during the previous day, what they intend to do
today, and if there are any obstacles in their way.

In Summary

A successful Lean implementation requires a deep understanding of the theory that stands behind
it, starting with the 5 principles of Lean. That's why you need to take your time to find the best
way to make it work in your organizational context. When taking the first steps to create a Lean
process, you should:

 Present the idea of Lean to your organization and make sure that they understand the expected
change and how it will benefit the whole organization.
 Start by separating value-adding from wasteful activities.
 Visualize the value stream that you deliver to your customer on a Kanban board.
 Create a smooth flow of delivering value to your customer by either alleviating or protecting the
bottlenecks in your process.
 Pull new work only when there is a demand for it, and you have a spare capacity.
 Adopt the proper culture to achieve continuous improvement in your process.

What Is a Pull System? Details and Benefits

A pull system is a Lean manufacturing principle created to reduce waste in the production
process. This kind of system offers many advantages, such as optimizing resources, increasing
flow efficiency, and more.

Imagine, you are on the way to a subway station and trying to pass the turnstile, you notice your
travel card is empty. What are you going to do?

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Sure, you will go to the ticket machine and refill the card. In doing so, you are already a part of a
pull system based on a certain signal.

In other words, a pull system lets you consume only when you have a demand, at the right time.

Aside from your trip to the subway, let’s explore more about pull systems and their application.

What is a Pull System?

A pull system is a Lean technique for reducing the waste of any production process. Applying a
pull system allows you to start new work only when there is customer demand for it. This allows
you to reduce overhead and optimize storage costs.

Why Is Pull Better Than Push?

Pull systems are part of the Lean manufacturing principles, born in the late 1940s. A lean pull
system aims to create a workflow where work is pulled only if there is a demand for it.

The purpose of implementing a pull system is to build products based on actual demand and not
on forecasts. By doing so, your company can focus on eliminating waste activities in the
production process. As a result, you’ll be able to optimize your resources and reduce the
possibility of overstocking.

Furthermore, applying a pull system will allow you to deliver work just in time.

“Just-in-time” is a production model where deliverables are produced in order to meet actual
demands and avoid overstocking and push strategies.

When applying a push strategy, a company’s production is based on anticipated demand, which
can fail to correspond with the actual demand. Such an imbalance can create unexpected
financial gaps.

In knowledge work, the “just-in-time” concept can be applied in the same way as in
manufacturing – a work item has to be in progress only if there is a demand for it.

This is the opposite of “Just in Case”, where companies somehow try to ensure themselves by
overproducing in case of higher demands somewhere in the future.

Apple is one of the brightest examples of how a pull system can be successful. Have you ever
seen these long waiting queues in front of the Apple stores during the iPhone's latest release?

Apple always creates a buzz around their new products, and consumers are always ready to buy.
They want to pull the product from the stores.

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Apple doesn’t overstock their shops or retail partners. They wait to see if there is a demand for
more, and if it increases, they produce more. This way, the company optimizes its resources and
achieves high-cost efficiency.

How To Manage a Pull System?

Nowadays, the pull system concept is widely spread across various industries. Professionals use
it not only in manufacturing but also in software development, customer support, and more.

In the context of workflow management, a pull system allows workers to pull their next task if
they have the capacity to start working on it. This may help you prioritize tasks better and
prevent teams from overloading. By doing so, your team can stay focused on executing the most
important work just in time.

To achieve higher levels of productivity and workflow efficiency by using a pull system, you
need to:

Apply pull signals

First of all, you need to establish pull signals. The best way to do so is by building a visual
workflow where all valuable information can be recorded and tracked. This first step will help
you acquire a full overview of your work process and catch all important signals.

Control the system

After building a visual pull system, you need to know how to control it. One of the most
common ways to manage your pull system effectively is by limiting work in progress (WIP).
This is one of the core practices of the Kanban method, which is a widespread pull system.

For example, on a Kanban board, your workflow is divided into different stages such as Ready to
start, In progress, Waiting for review, Ready for delivery, etc. By limiting the work that can be in
progress at each stage, you will create a smooth workflow and identify problematic parts in it.

This may misguide you to the illusion that your team will not use its full capacity by creating a
single-tasking model.

Contrary to the common belief that we should multitask to finish more work, limiting your WIP
will actually let your team members focus on single tasks until their completion.

While being focused, your team will be able to achieve excellence through flow and deliver work
much faster.

However, limiting work in progress will not be enough to build a sustainable pull system. You
will also need to limit the time a single item can spend in your system.

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This limit may vary depending on the size of a task, and it will serve as a requirement. If you
forget to do so, some tasks may spend a great amount of time in progress and reduce flow
efficiency.

Advantages of Using a Pull System

Unlike push systems, which force team members to work on multiple tasks, a pull system lets
team members focus on a single work item at a time. This approach allows a work unit to:

 Quickly adapt to changes that may occur in the work process

 Scale the optimal capacity of your team
 Deliver work items much faster
 Reduce waste of resources
 Increase productivity
 Improve flow efficiency

Actually, by using lean pull principles, you can be much more predictable when planning your
future work. How is this possible?

Pull systems allow you to collect historical data about your workflow and the average cycle time
of tasks.

Using this data combined with different forecasting techniques such as the Monte Carlo
simulation will give you a probable forecast about how much work can be processed in a
predefined period of time.

In Summary

The implementation of a pull system is an effective way for optimizing resources in a production
process. By applying such a system you will be able to:

 Eliminate waste activities

 Optimize cost-efficiency
 Meet actual demand
 Increase productivity and flow efficiency

What Is a Bottleneck and How to Deal With It?

When was the last time your team delivered a product on time? That is without a delay or any
overtime effort from certain members.

Process bottlenecks are among the reasons why projects get delayed, budgets burst from the
added cost of delays, and the whole process becomes unpredictable.

Instead of fighting the symptoms, all that a manager needs is a simple bottleneck analysis and a
set of prevention measures to save the day.

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In this article, you will learn how to use Kanban and Lean to identify and analyze process
bottlenecks to establish a predictable flow and put you in control.

What is a Bottleneck?

In the simplest definition, a process bottleneck is a work stage that gets more work requests than
it can process at its maximum throughput capacity. That causes an interruption to the flow of
work and delays across the production process.

In other words, even if this work stage operates at its maximum capacity, it still can’t process all
of the work items quick enough to push them to the next stages without causing a delay.

The workflow bottleneck can be a computer, a person, a department, or a whole work stage.
Typical examples of bottlenecks in knowledge work are software testing and quality review
processes.

Unfortunately, a bottleneck is often acknowledged only after it has caused a blockage in the
workflow.

There are simple yet effective analysis tools in Lean Management and Kanban that can help you
both prevent work congestion and spot an existing bottleneck.

How to Detect a Workflow Bottleneck?

If you see that your workflow is unpredictable and operates in bursts, you have a bottleneck
somewhere instead of a smooth flow.

The real issue lies in pinpointing it and setting an appropriate countermeasure. In Lean
Management, to detect a bottleneck, you can use several Kanban bottleneck analysis tools.

Here is how to identify a bottleneck in 3 steps:

1. Visualize. Keeping track of your work in the form of task cards on a Kanban board makes it very
easy to see where work items pile up, which is a strong sign of a problem, most likely a
bottleneck.
2. Map Queues and Activities. When we separate queues and activities and map them on the
Kanban board, we can see how much time our work sits waiting in a queue prior to a certain
activity. If this queue grows significantly faster than the activity stage processes work, you have
found your bottleneck.
3. Measure Cycle Time per Stage. Measuring cycle time at every stage lets you build a cycle time
heat map diagram. Just a glance at this diagram reveals the stages where cards spend the most
time. If these workflow stages are queues, too, those are probably your bottlenecks.

What to do next? How to deal with a bottleneck?

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At times, you can easily resolve the bottleneck by allocating more resources or people to that
work stage or process. That could mean hiring one more QA tester for the sake of more
streamlined production flow.

However, what if the bottleneck requires a particularly scarce resource or hard-to-find expertise?
In some cases, the cost of the solution to the bottleneck can be too high.

Leaving a bottleneck untreated will always cost you more than resolving it.

What should you do next then?

Here are several things you should do to contain the bottleneck:

 Never leave it idle. Because of the ripple effect on the rest of the flow, the bottleneck process
should always be loaded at full capacity.
 Reduce the strain on the bottleneck. Make sure that work arrives at it in its very best form. If
your review process is a bottleneck, ensure that the quality is built in from the start. The work to
be reviewed has to be flawless. Each error that the reviewer finds is going to cost you more time
and money.
 Manage WIP limits. If the work in progress limits are quite liberal in the bottleneck and there is
a lot of context switching, consider lowering the WIP limit. If it doesn’t have a WIP limit,
consider setting one.
 Process work in batches. Some of the operations would take less time if you organized similar
work items in batches. However, be cautious. The larger the batch size is, the higher is the risk.
The rule of thumb is that a smaller batch is always better, but in the real world, we sometimes
have to make compromises.
 Add more people and resources. If you can, increase the capacity of the bottleneck to speed up
the whole process. However, keep your eyes wide open. As soon as the system's resources are re-
distributed, another bottleneck is bound to appear elsewhere in the system.

Continuous Bottleneck Analysis With Kanban

The key to a healthy and productive Flow is the absolute minimum interruption to the process.
The work has to stream through it freely powered by the Pull power.

Following the Lean management concept of continuous improvement, bottleneck analysis should
also be an ongoing process.

After all, in the modern ever-changing markets, every time the relative balance in the production
system is disturbed, you will need to review the workflow to see if any new congestions occurred
and what needs to be done to reduce their effect.

Get your work under control with Kanban workflows and Lean bottleneck analysis tools to reach
an unprecedented level of flow predictability.

In Summary

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If your team is permanently stressed, delivery dates are consistently missed, and work items
never truly flow, you might want to perform a bottleneck analysis. Luckily, in combination with
Kanban tools, Lean management empowers you to discover and resolve bottlenecks quickly.

 Map your process and workflow visually to spot congestions.

 Measure flow metrics on the system level to get a better overview.
 Adjust resources distribution to resolve simple bottlenecks.
 Keep the workflow stable and predictable by continuous bottleneck analysis.

Just-in-Time Production: The Path to Efficiency

Just-in-time production (JIT) is not just another term in the Lean manufacturing dictionary. JIT is
a journey to zero waste and cost efficiency. Learn more.

It was not so long ago when organizations were overstocking their warehouses with resources
just in case a customer demand appears.

However, having a lot of inventories automatically means higher costs for maintaining these
extra resources. Logically, more inventories require more space and an additional workforce.

In the middle of the 20th century, struggling to reduce its high inventory costs, Toyota built the
foundation of Lean manufacturing.

They decided to apply a simple principle, which became the main pillar of the Toyota Production
System - Just-in-time (JIT) production. A simple inventory system where you only produce if
there is a demand for your production.

How Just-in-time Production Was Born

After World War II, Japanese manufacturers faced several challenges: lack of money, lack of
space to build large warehouses, and lack of natural resources.

All these factors put a roadblock that Japanese manufacturers had to remove in order to find their
way to industrial success. Then, Toyota came up with a simple solution – they just made their
processes lean.

The lean management of their resources was built upon the Just-in-time production philosophy.
A concept based on removing waste from business processes to achieve a streamlined, highly
efficient system that provides low-cost and high-quality products to support customer needs.

It took years for Toyota to perfect the Just-in-time production management, which is now
popular across various industries and applied by some of the most successful companies, such as
Dell, Harley-Davidson, and McDonald’s.

Benefits of Using Just-in-time Production

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Just-in-time started as a simple inventory system where you don’t store produced items or extra
resources needed to produce these items, but only produce when there is an actual demand for
your products or services.

But what are the actual benefits of using Just-in-time?

As much managerial philosophy as an inventory system, Just-in-time can play a key role in
supporting your company's lean management processes.

Using the JIT system will not only help you optimize the usability of resources but will give you
some distinctive competitive advantages:

Establishing a pull system. By following the just-in-time philosophy, your organization will
have the opportunity to create a pull system and apply it to your current production processes.
This way, only the work that needs to be done will be in progress.

Eliminate waste. The pull system will make your team deliver work items only if they have
been requested. This means that you will be able to eliminate different kinds of waste from your
production process.

Types of waste may vary depending on the industry, but in Lean management, there are 7 major
wastes:

 Waste of time
 Waste from overproduction
 Transportation waste
 Processing waste
 Inventory waste
 Waste of motion
 Waste from product defects

Visibility/Broad overview. Just-in-time production requires the application of team Kanban

boards. With their help, every member of your team will be able to recognize the current goals
and tasks.

This gives a much broader overview of the current processes, and all team members are familiar
with what needs to be done at every moment.

Smooth workflow. The Kanban board makes it much easier to acquire a full overview of the
working processes. Furthermore, it allows you to observe every stage of the workflow, so you
can easily detect and handle bottlenecks.

This way, you can always keep your team on the right track and maintain a smooth workflow.

Continuous improvement. Just-in-time production encourages every employee to analyze

current processes and offer suggestions for improvement.

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Widely known as Kaizen, this never-ending cycle will allow any team to constantly improve its
performance and “change for the better”.

Simplicity and Flexibility. Just-in-time management requires your team to work and deliver
small badges of tasks. It will allow you to find simple solutions for existing issues and be much
more flexible than teams that work on projects of a great scale.

This also positively impacts your team’s overall productivity because it lets team members focus
only on current tasks.

Practical Applications of Just-in-time Production Philosophy

The idea of having the right materials, at the right time, in the right quantities sounds perfect.
However, are there other examples, except Toyota, of successful JIT implementation?

The answer is yes. Furthermore, Just-in-time has also been successfully applied in other
industries different than manufacturing.

Dell is one of the most famous examples of the JIT’s triumph. The company revolutionized the
way computers are built.

Dell started to offer customized computers to customers in the 1990s, as the company never
stocked raw materials needed to build a computer until an order is placed.Image Source:
www.achievement.org

The company was able to order materials, build a machine with exact specifications, and deliver
it faster than competitors who had pre-made computers in stock.

This lowered Dell’s inventory costs and made them one of the most successful computer
manufacturers.

There are many other examples, but the important thing is that Just-in-time production changed
the way companies operate and understand the business. This Le

an philosophy allowed countless organizations to utilize their resources more effectively and
achieve sustainability.

In Summary

Just-in-time production is more of a philosophy than a strict guideline. When properly adopted,
JIT helps organizations to strengthen their competitiveness on the market. Just-in-time helps
companies to:

 Reduce waste and eliminate activities that don’t bring value.

 Improve the quality of their products and processes.
 Increase levels of productivity and optimize expenses.

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How to Implement and Manage an Efficient Kanban Pull System?

Implementing a pull system with Kanban can be extremely easy when you know precisely what
needs to be done to get it started and keep it running.

In the process of getting the hang of Lean management, you will learn that establishing a pull
system of work is among the most important prerequisites to achieving optimal process
efficiency.

Pull is a powerful concept that will allow you to take control of your workflow and deliver value
to your customers precisely when it counts. As we’ve already covered what a pull system is,
we’ll show you how to establish and maintain one with the Kanban method's help.

Why Use Kanban to Establish Pull Systems?

Kanban is the original and by far the most popular method for applying a pull system. It was part
of the Toyota Production System that brought attention to the lean way of managing work.What
makes Kanban so suitable for running a pull system is its simplicity. The method is built on a
short set of principles and values that are easy to teach and do not require a colossal change from
the very beginning.

Many teams fail to understand that Kanban is more than just a set of boards and cards. If you
want to implement a Kanban pull system successfully, your team needs to stick with the six core
practices of the method:

1. Visualize the workflow

2. Eliminate interruptions
3. Manage flow
4. Make process policies explicit
5. Maintain open feedback loops
6. Improve collaboratively

How to Implement a Pull System with Kanban?

There are 3 key steps you need to follow when you are preparing to apply a Kanban pull system
to your process. They will most likely determine whether your implementation will be successful
or not.

Map Your Workflow

Visualizing your workflow is the foundation of Kanban and a vital part of keeping your pull
system efficient. You need to be as precise as possible when preparing your Kanban board.

The default board setup consists of 3 sections representing your workflow states (requested, in
progress, done). You need to carefully consider every part of your process and determine the
steps of each stage.

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Typically, you would like to break down the In progress stage into as many steps as possible to
have a comprehensive view of your workflow and instantly spot any problems.

Establish Pull

After your boards are all set up and ready for action, you should stop pushing new work in your
process and start pulling only when there is a demand for it.

This will allow you to reduce your assignments' cycle time by focusing on work that will bring
value to your customers just at the right time. As a result, you will be able to increase your
process's efficiency and lower inventory costs.

Limit Work in Progress

Even if you pull new work when there is a demand for it, your process may get clogged and stay
inefficient. To be lean and make your Kanban pull system count, you need to control the amount
of work that gets in and out of your workflow.or this purpose, you need to place limits on the
work in progress (WIP) and make sure that your team complies with them. You may set up such
limits per person, work stage/column, or on a global scale for the whole board. You can also
restrict the utilization of given resources (ex. machines) in your process by using token-based
WIP limits.

Your goal here is to reduce the lead time of your work items and make your flow as smooth as
possible. For this to happen, you need to help your team focus. Encourage them to work on as
few tasks as possible simultaneously to avoid switching context.

How to Manage a Kanban Pull System?

After you’ve got your Kanban pull system up and running, you need to address another key
aspect of Lean management – continuous improvement. As a manager, you should keep a close
look at your process and make adjustments whenever needed. Here’s how you can approach this
in a few steps.

Break Down Work

Keeping your flow smooth and running requires that you take good care of the cycle time of all
cards that pass through your Kanban boards.

As you would want to reduce cycle times as much as possible, we advise you to break down your
work into tasks that require no more than a few days to move from requested to done.

This will allow your team to pull work more often from one stage to another and keep all parts of
your process running. As a result, you will not only reduce the cycle times of your work
assignments but increase the throughput of your pull system.

Apply Pull Signals

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Pull signals will allow your team to understand when a task is ready to be moved on to the next
stage of your workflow. In Kanban, the most simple way to apply such signals is to dedicate a
few columns for the purpose.

Simple examples of that are the “review” columns that you should place after every specific
activity that needs to be evaluated.This will allow you to signal that a work item is ready to move
on to the next stage and help you increase the built-in quality as you’ll be able to ensure that
there are no mistakes in the production process.

For example, in software development, you can break down your production process into 3
dedicated stages: tech design, coding, and testing. By adding a review step after every stage, you
can ensure that all aspects are communicated and there are no issues with the feature’s
deployment. Placing a column such as "Ready for review" will create a pull signal, indicating
that the person responsible for work evaluation needs to take action as soon as possible.

There are many other examples of applying a pull system in the knowledge work processes of
different industries. Let’s take architecture for instance.

Besides the “committed stage” where you plan the work to execute next, you can break down
your workflow into a: “Working stage” where you design drawings and a “Review stage” where
different subject matter experts give their feedback. It's then important to study your process,
apply WIP limits and pull signals such as buffer columns (ex. Ready for Review) in order to
signal that a work item is ready to move forward and so you can eventually smooth out your
workflow.

Manage Bottlenecks

Bottlenecks are an inevitable part of every process, no matter how advanced it is. They are a
typical reason for failing to establish a smooth workflow. The issue with bottlenecks derives
from the imbalance in the capacity of the distinct stages of your workflow.

For example, if you’ve got 10 developers working on your new product release and only one
person responsible for the code review stage, it will be no surprise that this will likely be your
bottleneck stage.

Often the real problem with managing bottlenecks is that they are not visible. However, if you’ve
mapped your workflow precisely on a Kanban board, they should be recognizable at first sight.

After noticing that a stage is becoming a bottleneck, you should waste no time but investigate the
root cause of the problem.

Afterward, you should take the proper measures to either eradicate the bottleneck or take action
to prevent it from clogging your process and obstructing your flow.

In Summary

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Kanban is the most popular way to establish and maintain a pull system thanks to the method’s
simplicity and the transparency it provides. To apply it properly, you need to:

 Map your workflow on a Kanban board.

 Establish a pull system.
 Limit the amount of work in progress.
 Break down large assignments into smaller tasks.
 Apply pull signals to your Kanban board.
 Manage your bottlenecks, so your flow never gets stuck.

How to Implement a Pull System on the Portfolio Level?

Implementing a pull system at the team level is not enough to ensure optimal process efficiency.
Learn how to take it to the next level with Portfolio Kanban.

The concept of pull revolutionized the manufacturing world half a century ago. Since then, it has
found its way to knowledge-work industries such as software development and marketing.

In theory, pull systems are easy to establish and manage.

In the next paragraphs, you’ll see the most common problems that get in the way of managers
trying to maintain a pull system and learn how to deal with them by applying the Portfolio
Kanban method.

Pull System on Team Level Doesn’t Automatically Scale to Portfolio

In reality, applying pull effectively is easy only on a small scale. When you try to maintain a pull
system on a project or even company level, things get tricky.

You break down large projects and delegate the different types of assignments among your
departments. Your team starts working more efficiently, and tasks start moving faster.
Everybody starts pulling work, and eventually, your system becomes chaos.

A lack of focus usually causes this due to low visibility and an absence of WIP limits on the
portfolio level. Even if you have mapped your process and are actively applying Kanban,
visualizing and limiting your workflow on a global level remains a challenge.

Your departments work on their distinctive Kanban boards and pull task after task without seeing
the bigger picture or even considering their colleagues' capacity.

As a result, you may face an unpleasant phenomenon – efficient workflows on the team level and
inefficient processes caused by bottlenecks created by uneven capacity between the teams.

Thankfully there is a way to avoid all these problems. It lies in applying the Portfolio Kanban
method. It is a lesser-known approach for managing your pull system on a global level by
visualizing and putting in order the dependencies in your process.

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Implementing a Pull System on a Global Level

Implementing a pull system at the portfolio level is not that different from the standard
application with Kanban. You need to take the core practices on a global level.

Visualize the breakdown of your projects

When applying pull on the portfolio level, you need to visualize the different layers of work
breakdown. With Portfolio Kanban, you can create multiple layers of Kanban boards that host
your large initiatives and the small tasks that you break them into.

Example of Portfolio Kanban breakdown

Each level that you create downward needs to be linked to the larger initiative so it can be
explicitly clear how your projects are progressing all the time.

The usual card relations in Portfolio Kanban are parent and child. When all children cards are
done, the parent is to be considered done as well.

By implementing a pull concept with Portfolio Kanban, you can create an alignment between
your departments. Every person will be aware of how the projects are progressing, focusing their
efforts precisely where it counts.

Limit work in progress on the portfolio level

The usual mistake that managers make is applying WIP limits on the team level but not on the
portfolio one. This can result in huge bottlenecks if there is a difference between the capacity of
the teams.

When implementing a pull system on the portfolio level, it is important to set initiative WIP
limits. This can prove quite difficult if you can’t see the big picture first and the connections
between your teams and their capacity.

Limiting work on the portfolio level

By applying limits to the work in progress on the portfolio level, you can ensure that work is
flowing smoothly.

It is better to have a team or two idle from time to time to ensure maximum flow efficiency
and short cycle times than to keep everybody busy without making significant progress and
clogging your process.

In Summary

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Applying a pull system is a great way to increase your team’s productivity. However, if you only
implement it on the team level, you risk losing focus and clogging your process on a global level.
By practicing pull on the portfolio level, you can:

 Maximize the value your teams produce.

 Limit the work in progress on a global level.
 Avoid process bottlenecks.

What Is Lean Six Sigma? Definition & Benefits

Lean Six Sigma represents a methodology for overall organizational culture change. At its core,
it is a process improvement approach for eliminating inefficiencies and improving work
processes by identifying the defects’ root causes.

Lean Six Sigma is the smart combination of the Lean methodology focused on removing waste
and optimizing flow, while the Six Sigma method seeks to identify and remove causing issues.

Let’s find out more about the two approaches individually.

A Brief History of Lean and Six Sigma

What Is Lean?

The Lean management methodology originates from Lean manufacturing, established by Toyota
in the late 1940s to reduce all non-value-adding activities from the work process.

At the heart of the Lean management methodology lie three clear values: deliver from your
customers’ perspective, eliminate all workflow waste, and continuously improve. In addition, to
build an organizational culture, the concept suggests letting the people drive the change. Thus,
the building blocks of Lean are its two pillars: respect for all people and continuous learning and
improvement.

“They key to the Toyota way and what makes Toyota stand out is not any of the individual
elements - but what is important is having all the elements together as a system.”

Taiichi Ohno, Industrial engineer and Businessman, Considered to be the father of the Toyota
Production System

What Is Six Sigma?

The Six Sigma process improvement method dates back to the 1980s. Motorola’s manufacturing
business first used the strategy to identify and reduce process defects and keep a low variability
of its manufacturing processes.

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The core of Six Sigma is:

 Focus on quantifiable and measurable financial results

 Management leadership and support is crucial for success
 Data-based decisions based on statistical data, rather than assumptions

The method employs the DMAIC (define; measure; analyze; improve; control) strategy, which
includes 5-steps to improve an existing process, and the DMADV (define; measure; analyze;
design; verify) strategy for creating a new one.

“Six Sigma is a quality program that, when all is said and done, improves your customer's
experience, lowers your costs, and builds better leaders."

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