Handbook Of: Lean Six Sigma

Handbook of
Lean Six Sigma
Reginald Matthews
Handbook of Lean
Six Sigma
Handbook of Lean
Six Sigma
Edited by
Reginald Matthews
Handbook of Lean Six Sigma
Edited by Reginald Matthews
ISBN: 978-1-9789-3985-1
© 2019 Library Press
Cataloging-in-Publication Data
Handbook of lean six sigma / edited by Reginald Matthews.

p. cm.
Includes bibliographical references and index.
ISBN 978-1-9789-3985-1
1. Six sigma (Quality control standard). 2. Total quality management. 3. Lean manufacturing.
I. Matthews, Reginald.
TS156.17.S59 H36 2019
658.401 3--dc23
This book contains information obtained from authentic and highly regarded sources. All chapters are
published with permission under the Creative Commons Attribution Share Alike License or equivalent. A
wide variety of references are listed. Permissions and sources are indicated; for detailed attributions, please
refer to the permissions page. Reasonable efforts have been made to publish reliable data and information,
but the authors, editors and publisher cannot assume any responsibility for the vailidity of all materials or
the consequences of their use.
Copyright of this ebook is with Library Press, rights acquired from the original print publisher, Larsen and
Keller Education.
Trademark Notice: All trademarks used herein are the property of their respective owners. The use of any
trademark in this text does not vest in the author or publisher any trademark ownership rights in such
trademarks, nor does the use of such trademarks imply any affiliation with or endorsement of this book by
such owners.
The publisher’s policy is to use permanent paper from mills that operate a sustainable forestry policy.
Furthermore, the publisher ensures that the text paper and cover boards used have met acceptable
environmental accreditation standards.
Table of Contents

Preface VII
Chapter 1 An Introduction to Lean Six Sigma 1

• Lean Six Sigma 1
• Lean Enterprise 10
Chapter 2 A Comprehensive Study of Lean Manufacturing 29

• Lean Manufacturing 29
• Lean IT 54
WT
• Lean CFP Driven 64
• Lean Construction 68
• Lean Laboratory 79
• Lean Product Development 82
• Lean Software Development 82
• The Visual Workplace 88
• Autonomation 90
Chapter 3 Fundamental Concepts of Lean Six Sigma 94

• Machine Operator Efficiency 94
• Overall Labor Effectiveness 99
• Total Productive Maintenance 103
• Just-in-time Manufacturing 105
• Andon (Manufacturing) 110
Chapter 4 Understanding Six Sigma 112

• Six Sigma 112
• DMAIC 129
• Design for Six Sigma 132
Chapter 5 Quality Management Tools and Techniques 138

• Quality Management 138
• Quality Management System 148
• Quality Assurance 173
• 5 Whys 178
• Business Process Mapping 181
• Control Chart 185
____________________ WORLD TECHNOLOGIES ____________________

VI Contents
• Design of Experiments 193

• Quality Function Deployment 203
• Quantitative Marketing Research 204
Chapter 6 Diverse Aspects of Lean Six Sigma 210

• Lean Dynamics 210
• Lean Thinking 212
• Computer-aided Lean Management 219
• Production Leveling 221
• Cellular Manufacturing 225

Permissions

Index
WT
Preface
The process of reducing waste and eliminating different types of waste is known as
Lean Six Sigma. It is based on the elements of lean manufacturing and Six Sigma to
reduce waste. The different types of wastes reduced in this area are over-processing
waste, transporting waste, defects, inventory waste, motion waste, waiting, over-
production and less than optimum utilization of employees. The book aims to shed
light on some of the unexplored aspects of Lean Six Sigma technology. It outlines the
processes and applications of this area in detail. The topics covered in this extensive
text deal with the core subjects of the area. Those with an interest in the Lean Six
Sigma field would find this textbook helpful.
WT
To facilitate a deeper understanding of the contents of this book a short introduction
of every chapter is written below:
Chapter 1- Lean six sigma is a managerial concept that combines methodologies of

lean manufacturing and six sigma. Lean manufacturing focuses on the elimination
of waste or muda while six sigma reduces variation in a manufacturing process as
well as removing defects. The chapter on lean six sigma offers an insightful focus,
keeping in mind the complex subject matter.
Chapter 2- Lean manufacturing is a managerial process that emphasizes on the

elimination of waste. It promotes those processes that add value by reducing those
that do not. The concept of waste has altered across time and the process but some
of these are transport, motion, overproduction, defects, etc. This chapter will provide
an integrated understanding of lean manufacturing.
Chapter 3- Though lean six sigma was first developed for manufacturing and
industrial processes, it has expanded into other sectors such as supply chain, finance
and healthcare. Overall labor effectiveness (OLE) is a key performance indicator
that measures the performance, utilization and quality of a workforce. The chapter
strategically encompasses and incorporates the major components and key concepts
of lean six sigma, providing a complete understanding.
Chapter 4- Six sigma is a managerial process that seeks to eliminate defects as well
as reduce variability. DMAIC is a methodology of six sigma that seeks to improve an
existing business project. The topics discussed in the chapter are of great importance
to broaden the existing knowledge on lean six sigma.

VIII Preface
Chapter 5- Quality management ensures consistency in an organization. It has four

fundamental components: quality assurance, quality control, quality planning and
quality improvement. The aspects elucidated in this chapter are of vital importance,
and provide a better understanding of quality management.
Chapter 6- There are many other processes that seek to eliminate waste. They have
developed to solve challenges of modern business processes. Some of the themes
discussed in this section include lean dynamics, lean thinking, computer-aided lean
management, etc. Lean six sig-ma is best understood in confluence with the major
topics listed in the following chapter.
I would like to share the credit of this book with my editorial team who worked
tirelessly on this book. I owe the completion of this book to the never-ending support
of my family, who supported me throughout the project.
WT
Editor

1
An Introduction to Lean Six Sigma
Lean six sigma is a managerial concept that combines methodologies of lean manu-
facturing and six sigma. Lean manufacturing focuses on the elimination of waste or
muda while six sigma reduces variation in a manufacturing process as well as removing
defects. The chapter on lean six sigma offers an insightful focus, keeping in mind the
complex subject matter.
WT
Lean Six Sigma
Lean Six Sigma is a methodology that relies on a collaborative team effort to improve
performance by systematically removing waste and reducing variation. It combines
lean manufacturing/lean enterprise and Six Sigma to eliminate the eight kinds of waste
(muda):
• Transporting
• Inventory
• Motion
• Waiting
• Over-Processing
• Over-Production
• Defects
• Under Utilization of employees
History
1980s-2000s
What was today to become Lean Six Sigma can be traced to Motorola in the United
States in 1986 to compete with the Kaizen business model in Japan. Ever since World

2 Handbook of Lean Six Sigma
War 2 Japan was experiencing an economic boom and Japanese products at the time
had a higher quality than American ones. In the 1990s Allied Signal hired Larry Bossidy
and introduced Six Sigma in heavy manufacturing. General Electric’s Jack Welch con-
sulted Bossidy and began Six Sigma at General Electric.
During the 2000s Lean Six Sigma forked from Six Sigma.
2000s-2010s
The first concept of Lean Six Sigma was created in 2001 by a book titled Leaning into
Six Sigma: The Path to integration of Lean Enterprise and Six Sigma by Barbara
Wheat, Chuck Mills, Mike Carnell.
In the early 2000’s Six Sigma principles expanded into other sectors of the economy,
such as Healthcare, Finance, Supply Chain, etc.
WT
Description
Lean Six Sigma is a synergized managerial concept of Lean and Six Sigma. Lean tradi-
tionally focuses on the elimination of the seven kinds of wastes/muda classified as de-
fects, overproduction, transportation, waiting, inventory, motion and over processing.
Six Sigma seeks to improve the quality of process outputs by identifying and removing
the causes of defects (errors) and minimizing variability in (manufacturing and busi-
ness) processes. Synergistically, Lean aims to achieve continuous flow by tightening the
linkages between process steps while Six Sigma focuses on reducing process variation
(in all its forms) for the process steps thereby enabling a tightening of those linkages.
In short, Lean exposes sources of process variation and Six Sigma aims to reduce that
variation enabling a virtuous cycle of iterative improvements towards the goal of con-
tinuous flow.
Lean Six Sigma organization structure
Lean Six Sigma uses the DMAIC phases similar to that of Six Sigma. Lean Six Sigma
projects comprise aspects of Lean’s waste elimination and the Six Sigma focus on re-
ducing defects, based on critical to quality characteristics. The DMAIC toolkit of Lean

An Introduction to Lean Six Sigma 3
Six Sigma comprises all the Lean and Six Sigma tools. The training for Lean Six Sigma
is provided through the belt based training system similar to that of Six Sigma. The belt
personnel are designated as white belts, yellow belts, green belts, black belts and mas-
ter black belts, similar to judo.
For each of these belt levels skill sets are available that describe which of the overall
Lean Six Sigma tools are expected to be part at a certain Belt level. These skill sets
provide a detailed description of the learning elements that a participant will have ac-
quired after completing a training program. The level upon which these learning ele-
ments may be applied is also described. The skill sets reflect elements from Six Sigma,
Lean and other process improvement methods like the theory of constraints (TOC)
total productive maintenance (TPM).
5S
WT
5S is a lean practice used to keep production workspace orderly and keep the work force
committed to maintaining order.
Japanese Terms
1. Seiri - Put things in order
2. Seiton - The proper arrangement
3. Seiso - Clean (keep polished)
4. Seiketsu - Purity (maintain clean)
5. Shitsuke - Commitment instilling attitude/atmosphere to maintain 5S
English Terms
1. Sort - Get rid of what is not necessary
2. Straighten - Everything has a place and is in it
3. Shine - Keep clean machine/workplace
4. Standardize - Systems and procedures to maintain 1-3
5. Sustain - Maintain systems/procedures (1-4)
Lean Startup
Lean startup is a methodology for developing businesses and products. The method-
ology aims to shorten product development cycles by adopting a combination of busi-
ness-hypothesis-driven experimentation, iterative product releases, and validated
learning. The central hypothesis of the lean startup methodology is that if startup com-

panies invest their time into iteratively building products or services to meet the needs
of early customers, they can reduce the market risks and sidestep the need for large
amounts of initial project funding and expensive product launches and failures.
History
The lean startup methodology was first proposed in 2008 by Eric Ries, using his per-
sonal experiences adapting lean management principles to high-tech startup compa-
nies. The methodology has since been expanded to apply to any individual, team, or
company looking to introduce new products or services into the market. The lean start-
up’s reputation is due in part to the success of Ries’ bestselling book, The Lean Startup,
published in September 2011. Amazon.com listed the book as one of their Best Business
Books of 2011, and by June 2012 the book had sold 90,000 copies.
WT
Ries’ said that his first company, Catalyst Recruiting, failed because he and his col-
leagues did not understand the wants of their target customers, and because they fo-
cused too much time and energy on the initial product launch. Next, Ries was a se-
nior software engineer with There, Inc., which Ries described as a classic example of
a Silicon Valley startup with five years of stealth R&D, $40 million in financing, and
nearly 200 employees at the time of product launch. In 2003, There, Inc. launched its
product, There.com, but they were unable to garner popularity beyond the initial ear-
ly adopters. Ries claims that despite the many proximate causes for failure, the most
important mistake was that the company’s “vision was almost too concrete”, making
it impossible to see that their product did not accurately represent consumer demand.
Although the lost money differed by orders of magnitude, Ries concluded that the fail-
ures of There, Inc. and Catalyst Recruiting shared similar origins: “it was working for-
ward from the technology instead of working backward from the business results you’re
trying to achieve.”
Precursors
The lean startup methodology is based on lean manufacturing, the streamlined produc-
tion process pioneered by Taiichi Ohno by combining flow principles used by Henry
Ford starting in 1906 and the TWI programs introduced to Japan in 1951. After more
than 15 years of experiments, he had a stable and reproducible system. Use of the term
lean to describe Ohno’s system was first formalized in the book The Machine That
Changed the World.
The lean manufacturing system considers as waste the expenditure of resources for any
goal other than the creation of value for the end customer, and continually seeks ways
to eliminate such waste. In particular, the system focuses on minimizing inventory
throughout the assembly line. Kanban cards are used to signal only when the necessary
inputs to production are needed, and in so doing, reduce assembly waste (invento-

ry) and increase productivity. Additionally, immediate quality control checkpoints can
identify mistakes or imperfections during assembly as early as possible to ensure that
the least amount of time is expended developing a faulty product. Another primary fo-
cus of the lean management system is to maintain close connections with suppliers in
order to understand their customers’ desires.
In an article published in the Harvard Business Review in 2013, Ries’ mentor Steve
Blank described how the lean startup methodology also draws its inspiration from the
work of people like Ian C. MacMillan and Rita Gunther McGrath who developed a tech-
nique called discovery-driven planning, which was an attempt to bring an entrepre-
neurial mindset to planning.
Overview
WT
Similar to the precepts of lean manufacturing, the lean startup methodology seeks to
eliminate wasteful practices and increase value-producing practices during the product
development phase so that startups can have a better chance of success without requir-
ing large amounts of outside funding, elaborate business plans, or the perfect product.
Customer feedback during product development is integral to the lean startup process,
and ensures that the producer does not invest time designing features or services that
consumers do not want. This is done primarily through two processes, using key per-
formance indicators and a continuous deployment process.
Because startups typically cannot afford to have their entire investment depend upon
the success of one single product launch, the lean startup methodology proposes that
by releasing a minimum viable product that is not yet finalized, the company can then
make use of customer feedback to help further tailor their product to the specific needs
of its customers.
The lean startup methodology asserts that the “lean has nothing to do with how much
money a company raises”; rather it has everything to do with assessing the specific de-
mands of consumers and how to meet that demand using the least amount of resources
possible.
Definitions
Minimum Viable Product
A minimum viable product (MVP) is the “version of a new product which allows a team
to collect the maximum amount of validated learning about customers with the least
effort” (similar to a pilot experiment). The goal of an MVP is to test fundamental busi-
ness hypotheses (or leap-of-faith assumptions) and to help entrepreneurs begin the
learning process as quickly as possible. As an example, Ries notes that Zappos founder
Nick Swinmurn wanted to test the hypothesis that customers were ready and willing to
buy shoes online. Instead of building a website and a large database of footwear, Swin-

murn approached local shoe stores, took pictures of their inventory, posted the pictures
online, bought the shoes from the stores at full price after he’d made a sale, and then
shipped them directly to customers. Swinmurn deduced that customer demand was
present, and Zappos would eventually grow into a billion dollar business based on the
model of selling shoes online.
Continuous Deployment (Only for Software Development)

Continuous deployment, similar to continuous delivery, is a process “whereby all code
that is written for an application is immediately deployed into production,” which re-
sults in a reduction of cycle times. Ries states that some of the companies he’s worked
with deploy new code into production as often as 50 times a day. The phrase was coined
by Timothy Fitz, one of Ries’s colleagues and an early engineer at IMVU.
WT
Split Testing
A split or A/B test is an experiment in which “different versions of a product are of-
fered to customers at the same time.” The goal of a split test is to observe differences
in behavior between the two groups and to measure the impact of each version on an
actionable metric.
A/B testing can also be performed in serial fashion where a group of users one week
may see one version of the product while the next week users see another. This can
be criticized in circumstances where external events may influence user behavior in
one time period but not the other. For example, a split test of two ice cream flavors
performed in serial during the summer and winter would see a marked decrease in
demand during the winter where that decrease is mostly related to the weather and not
to the flavor offer.
Actionable Metrics
Actionable metrics can lead to informed business decisions and subsequent action.
These are in contrast to vanity metrics—measurements that give “the rosiest picture
possible” but do not accurately reflect the key drivers of a business.
Vanity metrics for one company may be actionable metrics for another. For example,
a company specializing in creating web based dashboards for financial markets might
view the number of web page views per person as a vanity metric as their revenue is
not based on number of page views. However, an online magazine with advertising
would view web page views as a key metric as page views are directly correlated to
revenue.
A typical example of a vanity metric is “the number of new users gained per day”. While
a high number of users gained per day seems beneficial to any company, if the cost of
acquiring each user through expensive advertising campaigns is significantly higher than

the revenue gained per user, then gaining more users could quickly lead to bankruptcy.
Pivot
A pivot is a “structured course correction designed to test a new fundamental hypothe-
sis about the product, strategy, and engine of growth.” A notable example of a company
employing the pivot is Groupon; when the company first started, it was an online activ-
ism platform called The Point. After receiving almost no traction, the founders opened
a WordPress blog and launched their first coupon promotion for a pizzeria located in
their building lobby. Although they only received 20 redemptions, the founders real-
ized that their idea was significant, and had successfully empowered people to coordi-
nate group action. Three years later, Groupon would grow into a billion dollar business.
Steve Blank defines a pivot as “changing (or even firing) the plan instead of the execu-
WT
tive (the sales exec, marketing or even the CEO).”
Innovation Accounting
This topic focuses on how entrepreneurs can maintain accountability and maximize
outcomes by measuring progress, planning milestones, and prioritizing.
Build-Measure-Learn
The Build–Measure–Learn loop emphasizes speed as a critical ingredient to product de-
velopment. A team or company’s effectiveness is determined by its ability to ideate, quickly
build a minimum viable product of that idea, measure its effectiveness in the market, and
learn from that experiment. In other words, it’s a learning cycle of turning ideas into prod-
ucts, measuring customers’ reactions and behaviors against built products, and then decid-
ing whether to persevere or pivot the idea; this process repeats as many times as necessary.
The phases of the loop are: Ideas → Build → Product → Measure → Data → Learn.
This rapid iteration allows teams to discover a feasible path towards product/market
fit, and to continue optimizing and refining the business model after reaching product/
market fit.
Definitions Popularized after the Lean Startup

Business Model Canvas
The Business Model Canvas is a strategic management template invented by Alexander
Osterwalder and Yves Pigneur for developing new business models or documenting
existing ones. It is a visual chart with elements describing a firm’s value proposition,
infrastructure, customers, and finances. It assists firms in aligning their activities by
illustrating potential trade-offs.

Lean Canvas
The Lean Canvas is a version of the Business Model Canvas adapted by Ash Maurya specif-
ically for startups. The Lean Canvas focuses on addressing broad customer problems and
solutions and delivering them to customer segments through a unique value proposition.
The Movement
Ries and others created an annual technology conference called Startup Lessons
Learned which has subsequently changed its name to the Lean Startup Conference.
Lean startup meetups in cities around the world have garnered 20,000 regular partic-
ipants. The first lean startup meetup named Lean Startup Circle was created by Rich
Collins on June 26, 2009 hosting speaking events, workshops, and roundtable discus-
sions. As of 2012, there are lean startup meetups in over 100 cities and 17 countries
WT
as well as an online discussion forum with over 5500 members. Third-party organiz-
ers have led lean startup meetups in San Francisco, Chicago, Boston, Austin, Beijing,
Dublin, and Rio de Janeiro, among others—many of which are personally attended
by Ries—with the Chicago and New York City Lean Startup Meetups attracting over
4,000 members each. The Lean Startup Machine created a new spin on the lean startup
meetups by having attendees start a new company in three days. As of 2012, the Lean
Startup Machine claimed to have created over 600 new startups this way.
Several prominent high-tech companies have begun to publicly employ the lean startup
methodology, including Intuit, Dropbox, Wealthfront, Votizen, Aardvark, and Grockit.
The lean startup principles are also taught in classes at Harvard Business School and UC
Berkeley and are implemented in municipal governments through Code for America.
In addition, the United States Government has recently begun to employ lean startup
ideas. The Federal Chief Information Officer of the United States, Steven VanRoekel not-
ed that he is taking a “lean-startup approach to government.” Ries has also worked with
the former and current Chief Technology Officers of the United States—Aneesh Chopra
and Todd Park respectively—to implement aspects of the lean startup model into the
United States Government. In particular, Park noted that in order to understand cus-
tomer demand, the Department of Health and Human Services, recognized “the need to
rapidly prototype solutions, engage customers in those solutions as soon as possible, and
then quickly and repeatedly iterate those solutions based on working with customers.”
In May 2012, Ries and The White House announced the Presidential Innovation Fellows
program, which brings together top citizen innovators and government officials to work
on high-level projects and deliver measurable results in six months.
Lean Concepts
Lean startup principles have been applied to specific competencies within typical start-
ups and larger organizations:

• Lean analytics
• Lean brand management
• Lean hardware
• Lean events
• Lean manufacturing
• Lean marketing
• Lean product management
• Lean sales
WT
• Lean software development
• Lean UX
Criticism
Ben Horowitz, the co-founder of venture capital firm Andreessen Horowitz, wrote an
article in 2010 criticizing the lean startup method for over-emphasizing “running lean”
(constantly cutting and reducing non-essential parts of the company to save time and
money). He specifically disagreed with portraying “running lean” as an end rather than
a means to winning the market without running out of cash. Horowitz gave as an ex-
ample his startup Loudcloud, which by “running fat” was able to outperform 20 di-
rect competitors and after 8 years reach a value of $1.6 billion. However, at least since
2008, numerous advocates of lean methods have pointed out that “running lean” does
not mean cost cutting.
Trey Griffith, the VP of technology at Teleborder, stated in 2012 that the majority of
backing for the lean startup methodology was anecdotal and had not been rigorously
validated when first presented. However, he goes on to note that better support of the
method comes out of a 2011 analysis of the factors of success in growth companies as
described in the 2011 book Great by Choice.
John Finneran, a business writer and former user of the lean startup method, described
in 2013 a number of the method’s assumptions that he did not recognize during his use
of the method. In particular, he observed that his clients were often not motivated to
invest time and effort into helping iterate a minimal viable product; instead they want-
ed a more polished product to begin with. Second, he found virtually no early adopters
who were willing to try to give feedback on unpolished software simply to be the first
to get a chance at it. Third, he argued that lean startup can distract from essential tra-
ditional management practices like development discipline and budget protection. In
general, he stated that it is important to be critical and skeptical of lean startup meth-

ods rather than pre-supposing that they will be effective. Ries had already anticipated
this criticism in his book when he wrote, on page 279: “We cannot afford to have our
success breed a new pseudoscience around pivots, MVPs, and the like. This was the fate
of scientific management, and in the end, I believe, that set back its cause by decades.”
This implies that the concept of validated learning applies to the lean startup methods
themselves, and not just to products.
Lean Enterprise
Lean enterprise is a practice focused on value creation for the end customer with mini-
mal waste and processes. The term has historically been associated with lean manufac-
turing and Six Sigma (or Lean Six Sigma) due to lean principles being popularized by
WT
Toyota in the automobile manufacturing industry and subsequently the electronics and
internet software industries.
Principles and Variants

Principles for lean enterprise derive from lean manufacturing and Six Sigma principles:
There are five principles, originating from lean manufacturing, outlined by James
Womack and Daniel Jones
• Value: Understand clearly what value the customer wants for the product or
service.
• Value Stream: The entire flow of a product’s or service’s life cycle. In other
words, from raw materials, production of the product or service, customer de-
livery, customer use, and final disposal.
• Flow: Keep the value stream moving. If it’s not moving, it’s creating waste and
less value for the customer.
• Pull: Do not make anything until the customer orders it.
• Perfection: Systematically and continuously remove root causes of poor quality

from production processes.
There are key lean enterprise principles originating from Lean Six Sigma principles.
These principles focus on eliminating 8 varieties of waste (Muda) and form the acro-
nym DOWNTIME:
• Defects
• Overproduction

• Waiting
• Non-Utilized Talent
• Transportation
• Inventory
• Motion
• Extra-Processing
These 8 varieties of waste are derivative from the original 7 wastes as defined in the
Toyota Production System. They are:
• Transportation
WT
• Inventory
• Motion
• Waiting
• Overproduction
• Over-processing
• Defects
The 8th waste of non-utilized talent was not recognized until post-Americanization of
the Toyota Production System.
The lean startup principles, developed from 2008 from lean manufacturing, also now
contribute to our understanding of lean enterprise:
• Eliminate wasteful practices
• Increase value producing practices
• Customer feedback during product development
• Build what customers want
• KPIs
• Continuous deployment process
History
Early 1900s: Ford, GM & Toyota Systems
Henry Ford developed a process called assembly line production. This is a manufactur-
ing process in which parts are added as the assembly moves from work station to work
station where parts are added in sequence until final assembly is produced.

Alfred Sloan of General Motors further developed the concept of assembly line pro-
duction by building a process called mass production that allowed scale and variety.
This process enabled large amounts of standardized products to run through assembly
lines while still being able to produce more variety and compete against Ford’s single
offering.
Kiichiro Toyoda studied the Ford production system and adapted the process in order
to have smaller production quantities. He built a production system called Just-in-
Time Manufacturing for Toyota along with Taichi Ohno. It’s worth noting too that kai-
zen, the process of continuous improvement, was developed in the 1950s by Eiji Toyoda
along with the Toyota Production System.
1980s & 1990s: Motorola
WT
New innovations in lean enterprise moved away from machine technology to electronic
technology.
Another development was management techniques from Motorola commonly referred

to as Six Sigma. This management technique was built off of mass production princi-
ples with more focus on minimizing variability. Applying Six Sigma principles led to
reduced cycle time, reduced pollution, reduced costs, increased customer satisfaction,
and increased profits.
1990s & 2000s: Internet Companies

New innovations in lean enterprise moved away from electronic manufacturing to in-
ternet and software technology. Before, during, and after the dot-com bubble, internet
and software enterprises originally did not place emphasis on lean enterprise princi-
ples for efficient usage and allocation of capital and labor due to accessible funds from
venture capital and capital markets. The idea of “build it and they will come” became
common practice as a result.
After the dot-com bubble, inspired by the Agile Manifesto, internet and software com-
panies began operating under agile software development practices such as Extreme
programming. Along with the agile software movement, companies (especially start-
ups) applied both lean enterprise and agile software principles together in order to
develop new products or even new companies more efficiently and based on validated
customer demand. Very early practices of lean enterprise and agile software principles
was commonly referred to as lean startup.
After 2010, more and more enterprises are adopting this new branch of lean enterprise
(lean startup) since it provides principles and methodologies for non-internet enter-
prises to enter in new markets or offer goods and services in new form factors with less
time, labor, and capital. For internet and software enterprises (by tradition), the Lean
startup variant of lean enterprise enabled them to remain competitive with new tech-

nologies and services that are rapidly coming out to market without exclusively resort-
ing to mergers and acquisitions, and being able to retain internal innovation ecosystem
competency.
Lean Accounting
The purpose of Lean Accounting is to support the lean enterprise as a business strategy.
It seeks to move from traditional accounting methods to a system that measures and
motivates excellent business practices in the lean enterprise.
What we now call lean manufacturing was developed by Toyota and other Japanese
companies. Toyota executives claim that the famed Toyota Production System was in-
spired by what they learned during visits to the Ford Motor Company in the 1920s and
developed by Toyota leaders such as Taiichi Ohno and consultant Shigeo Shingo after
WT
World War II. As pioneer American and European companies embraced lean manufac-
turing methods in the late 1980s, they discovered that lean thinking must be applied to
every aspect of the company including the financial and management accounting pro-
cesses.
There are two main thrusts for Lean Accounting. The first is the application of lean
methods to the company’s accounting, control, and measurement processes. This is no
different from applying lean methods to any other processes. The objective is to elim-
inate waste, free up capacity, speed up the process, eliminate errors and defects, and
make the process clear and understandable.
The second (and more important) thrust of Lean Accounting is to fundamentally

change the accounting, control, and measurement processes so they motivate lean
change and improvement, provide information that is suitable for control and deci-
sion-making, provide an understanding of customer value, correctly assess the finan-
cial impact of lean improvement, and are themselves simple, visual, and low-waste.
Lean Accounting does not require the traditional management accounting methods
like standard costing, activity-based costing, variance reporting, cost-plus pricing,
complex transactional control systems, and untimely confusing financial reports.
These are replaced by
• lean-focused performance measurements
• simple summary direct costing of the value streams
• decision-making and reporting using a box score
• financial reports that are timely and presented in “plain language” that every-
one can understand
• radical simplification and elimination of transactional control systems by elim-

inating the need for them

• driving lean changes from a deep understanding of the value created for the
customers
• eliminating traditional budgeting through monthly sales, operations, and fi-

nancial planning processes (SOFP)
• value-based pricing
• correct understanding of the financial impact of lean change
As an organization becomes more mature with lean thinking and methods, they recog-
nize that the combined methods of Lean Accounting in fact creates a Lean Management
System (LMS) designed to provide the planning, the operational and financial report-
ing, and the motivation for change required to prosper the company’s on-going lean
transformation.
WT
Up until 2006, the methods of Lean Accounting were not clearly defined because they
had been developed by different people in different companies. A meeting was held at
the 2005 Lean Accounting Summit (Lean Accounting Summit) conference including a
number of leaders in the field, and a decision was made to develop a document called
“The Principles, Practices, and Tools of Lean Accounting” (PPT) (Lean Accounting
PPT). While the methods of lean accounting are continually evolving, the PPT lays out
the primary methods of Lean Accounting and shows how they fit together into a Lean
Management System. The PPT emphasizes not only the tools and methods of Lean Ac-
counting, but also the need for focusing on customer value and the empowerment (or
respect) for people. The PPT was published in Target, the Journal of the Association of
Manufacturing Excellence (AME) in 2006.
The Vision for Lean Accounting

1. Provide accurate, timely, and understandable information to motivate the lean
transformation throughout the organization, and for decision-making leading
to increased customer value, growth, profitability, and cash flow.
2. Use lean tools to eliminate waste from the accounting processes while main-
taining thorough financial control.
3. Fully comply with generally accepted accounting principles (GAAP), external
reporting regulations, and internal reporting requirements.
4. Support the lean culture by motivating investment in people, providing infor-
mation that is relevant and actionable, and empowering continuous improve-
ment at every level of the organization.
Need for Lean Accounting

There are positive and negative reasons for using Lean Accounting. The positive rea-

sons include the issues addressed in the “Vision for Lean Accounting” shown above.
Lean Accounting provides accurate, timely and understandable information that can
be used by managers, sales people, operations leaders, accountants, lean improvement
teams and others. The information gives clear insight into the company’s performance;
both operational and financial. The Lean Accounting reporting motivates people in the
organization to move lean improvement forward. It is often stated that “what you mea-
sure is what will be improved.” Lean accounting measures the right things for a compa-
ny that wants to drive forward with lean transformation.
WT
Lean Accounting is also itself lean. The information, reports, and measurements can
be provided quickly and easily. It does not require the complex systems and wasteful
transactions that are usually used by manufacturing companies. The simplicity of Lean
Accounting frees up the time of the financial people and the operational people so that
they can become more actively involved in moving the company forward towards its
strategic goals. The role of the financial professional moves away from bookkeeper and
reporter and towards strategic partnering with the company leaders.
At a deeper level Lean Accounting matches the cultural goals of a lean organization.
The simple and timely information empowers people at all levels of the organization.
The financial and performance measurement information is organized around value
streams and thereby honors the lean principle of value stream management. The em-
phasis on customer value is also derived from the principles of lean thinking. The way
a company accounts and measures its business is deeply rooted in the culture of the or-
ganization. Lean Accounting has an important role to play in developing a lean culture
within an organization.
Why is Traditional Accounting not Needed?

The negative reasons for using Lean Accounting lie with the inadequacy of tradition-
al accounting systems to support a lean culture. Everybody working seriously on the
lean transformation of their company eventually bumps up against their accounting
systems. Traditional accounting systems (particularly those using standard costing,
activity-based costing, or other full absorption methods) are designed to support tra-

ditional management methods. As a company moves to lean thinking, many of the fun-
damentals of its management system change and traditional accounting, control, and
measurement methods become unsuitable. Some examples of this are:
WT
• Traditional accounting systems are large, complex processes requiring a great
deal of non-value work. Lean companies are anxious to eliminate this kind of
non-value work.
• They provide measurements and reports like labor efficiency and overhead ab-
sorption that motivate large batch production and high inventory levels. These
measurements are suitable for mass production-style organizations but actively
harmful to companies with lean aspirations.
• The traditional accounting systems have no good way to identify the financial
impact of the lean improvements taking place throughout the company. On the
contrary, the financial reports will often show that bad things are happening
when very good lean change is being made. One example of this is that tradi-
tional reporting shows a reduction in profitability when inventory is reduced.
Lean companies always make significant inventory reductions and the account-
ing reports show negative results.
• Traditional accounting reports use technical words and methods like “overhead
absorption”, “gross margin”, and many others. These reports are not widely un-
derstood within most organizations. This may be acceptable when the financial
reports are restricted to senior managers, but a lean company will seek to em-
power the entire workforce. Clear and understandable reporting is required so
that people can readily use the reports for improvement and decision-making.
• Traditional companies use standard product (or service) costs which can be
misleading when making decisions related to quoting, profitability, make/buy,
sourcing, product rationalization, and so forth. Lean companies seek to have
a clearer understanding of the true costs associated with their processes and
value streams.

There are of course traditional methods for overcoming some of these issues and prob-
lems. Indeed, few of the methods of Lean Accounting are new ideas. They are mostly
adaptations of methods that have been used for many years, and have been codified
into a Lean Management System designed to support the needs of lean thinking orga-
nizations.
Where does Lean Accounting Apply?

As with most lean methods, Lean Accounting was developed to support manufactur-
ing companies, and most of the implementation of Lean Accounting has been within
manufacturing organizations. Now that lean methods are moving into other industries
like financial services, healthcare, government, and education there are some initial
examples of the application of Lean Accounting in these industries.
WT
Getting Started
Application to Accounting Processes

In the early stages of lean it is important to apply lean improvement throughout the
organization; and there is nowhere more suitable than the accounting processes. These
include the month-end close, accounts payable, accounts receivable, payroll, cost ac-
counting, expense reporting, and so forth. There are three reasons for applying lean
improvement methods to the accounting processes:
1. The processes will be improved and the company’s operations made better.
2. The finance people will learn a lot about lean methods. Lean is not learned from
books but by actual hands-on experience.
3. The removal of waste will free up time for the finance people to work on the
introduction of Lean Accounting.

Some people object to making changes to the Accounting processes because they ask
why we would want to spend time making processes better when in fact we will be elim-
inating them in the future. The answer to this is that with lean we are always interested
in making many small improvements. We are not looking for the “silver bullet” that will
solve all problems. On the contrary, we are looking to engage the entire work force in
many smaller changes that lead to massive improvement over time. It is, of course, our
objective over time to largely eliminate most of these wasteful accounting processes,
but at the earlier stages of lean change we are content to improve the processes, pro-
vide learning to the finance people, and free up their time for the more significant lean
changes in the future.
Lean Performance Measurements

The control of the production (and other) processes is achieved by visual performance
WT
measurements at the shop-floor and value stream level. These measurements eliminate
the need for the shop-floor tracking and variance reporting favored by traditional cost
accounting systems. There are (at least) three levels of operational performance mea-
surements.
Plan Do Check Act Typical Fre-

Purpose
Improvement quency
Enable the senior managers of
Company or Plant the company monitor
Strategy Deployment Monthly
Measurements the achievement of the compa-
ny’s strategy.
Track the performance of the
Value Stream Mea- value stream and provide Continuous Improve-
Weekly
surements information to drive continu- ment
ous improvement (CI).
Enable the cell team to monitor
Cell and Process Identify defects and
and control their own activi- Hourly or by shift
Measurements eliminate them
ties.
Continuous improvement (CI) is motivated and tracked using value stream perfor-
mance boards. Typically these visual boards are updated weekly and used by the val-
ue stream CI team to identify improvement areas, initiate PDCA projects, and moni-
tor their progress. These boards show the value stream performance measurements,
pareto charts (or other root cause analysis), and information about the CI projects.
The boards also show the current and future state maps together with the project plan
to move from current to future state. The Value Stream Performance Boards become
“mission control” for both break-through improvement and continuous improvement
of the value stream.
Typical measurements include:
• Productivity (sales/person)

• Process control (on-time shipment to customer requirement)

• Flow (dock-to-dock days or hours)
• Quality & Standardized Work (first time through without scrap or rework)
• Linearity and overall improvement (average cost)
• People participating in CI
• Safety (Safety cross showing lost time, accidents, near-misses, etc.)
Cell and process measurements are reported frequently – often hourly – by the people
working in the cell or the process. The measurements are used to control the process
and identify defects. When defects are identified they are “fixed” in the short term to
serve the customers today and solved over the longer term so that they never occur
WT
again.
Typical measurements include:

• Day-by-the-Hour production quantities
• First Time Thru without scrap or rework
• WIP to SWIP (work-in-process inventory within the cell or process compared to
the standard work-in-process required within the process)
• Operational equipment effectiveness – OEE (for machine driven operations
and particularly for bottleneck or constraint machines.)
• “Just-Do-It” suggestions per person.
Financial Reports for Lean Operations

Value Stream Costing
Cost and profitability reporting is achieved using Value Stream Costing, a simple sum-
mary direct costing of the value streams. The value stream costs are typically collected
weekly and there is little or no allocation of “overheads.” This provides financial in-
formation that can be clearly understood by everybody in the value stream which in
turn leads to good decisions, motivation to lean improvement across the entire value
stream, and clear accountability for cost and profitability. Weekly reporting also pro-
vides excellent control and management of costs because they can be reviewed by the
value stream manager while the information is still current.
Plain Language Financial Statements

Lean accounting provides financial reports that are readily understandable to anyone
in the company. The income statements are in “plain language” and the information

is presented in a way that is no more complicated than a household budget. Plain lan-
guage income statements are easy to use because they do not include misleading and
confusing data relating to standard costs and hosts of incomprehensible variance fig-
ures. When used in meetings, plain language financial statements change the question
from “What does this mean?” to “What should we do?”.
Box Score Reporting
WT
Box Scores are used widely within lean accounting. The standard format of the box
score shows a 3-dimensional view of value stream performance; operational perfor-
mance measurements, financial performance, and how the value stream capacity is be-
ing used. The capacity information shows how much of the capacity within the value
stream is used productively, how much is used to do non-productive activities, and how
much value stream capacity is available for use. The box score shows the value stream
performance on a single sheet of paper and using a simple and accessible format.
The box score shown on the right shows weekly value stream performance. Other box
scores are used for decision-making, for assessing the financial impact of lean im-
provement, for selecting or prioritizing such issues as capital acquisitions using the 3P
approach, and other reporting and decision-making requirements. Companies using
lean accounting often have a standard box score format and require that all decisions
relating to a value stream be presented using the standard box scores. This leads to
operational and financial information being consistent and well understood when it
is used.
Making Decisions without the use of Product or Process Costs

Decision-Making using Box Scores and Value Stream Cost
Information
Routine decision-making – including quotes, profitability, make/buy, sourcing, prod-
uct rationalization, and so forth – is achieved using simple yet powerful information
that is readily available from the box score. There is no need to use a standard cost
again for these important decisions. The Box Score shows an example of this method
for decision-making related to sourcing of a new product.

Most companies using lean accounting create standard templates for the various kinds
of daily routine decisions. These will include assessing the profitability of a sales order
WT
or request for quote, make-buy decisions for products or components, the impact of im-
provement projects, and so forth. These templates often access box score information
from the lean accounting information within the company’s systems. The availability of
capacity is often a crucial issue when making these kinds of short-term decisions.
The box score shown in this example demonstrates a short term decision and assumes
that the company’s capacity and costs are largely fixed. There are two other kinds of
decisions used regularly in lean companies; medium term decisions and strategic deci-
sions. Box Scores are also used for medium term decisions but there is no assumption
of fixed capacity and costs. The template shows how the capacity and resources need to
be changed to fulfill the decision. These decisions are linked in the SOFP (Sales, Oper-
ations, and Financial Planning) process that typically looks out 12–18 months. The Box
Score is also used for strategic decisions such as the introduction of new products, and
the templates feed into the company’s Strategy Deployment (Hoshin Kanri) and Target
Costing processes.
The Box Score method is flexible to meet the needs of different kinds of decisions, yet
using the same underlying approach that we do not try to calculate a fully absorbed
product cost. Instead the impact of these decisions on the value stream as a whole is
used to assess the suitability of each of our choices. This leads to better understanding
and better decisions, when used with standard decision-making processes.
Product or Service Costing

Under most circumstances it is not necessary to calculate product or service costs. Tra-
ditional manufacturing companies usually calculate a fully absorbed product cost using
complex methods for the allocation of overhead costs, and they use these product costs
for decision-making, inventory valuation, and performance measurements in the form
of variance analysis and such metrics as individual efficiency. Similar methods are used
in service organizations to estimate the cost of each service they provide. Companies
employing lean accounting methods recognize that standard costs and other methods

for fully absorbed product or service costing lead to poor decisions and motivate an-
ti-lean behavior. These companies also find that there is no need to calculate a product
cost because all the uses of product costs within traditional companies can be addressed
in lean accounting using simpler and better methods. Decision-making, inventory val-
uation, performance measurements, and other uses of fully absorbed product costs are
all achieved using other lean accounting methods. If a product cost is required – for
reporting international transfer pricing, for example – then these can be calculated
using simpler and more lean-focused methods like Features & Characteristics costing.
External Reporting
Closing the Books
WT
The primary collection of revenue and costs is done using Value Stream Costing, and
(typically) weekly value stream income statements are used by the value stream man-
agers to control costs and work to reduce costs. A typical lean organization will have
several revenue earning or order fulfillment value streams, one or two new product
development value streams, and then a small group of people and departments that
support the value streams but are not in the value streams. These external support
people include, for example, a plant or division manager, HR, Information systems,
and so forth. The costs of these support people is relatively small in comparison to the
value streams.
External reporting is achieved by taking the monthly value stream income statements
and the financial statement for the support people and adding them together to provide
the consolidated financial report for the company or division as a whole. This month-
end close provides financial reports for the company that can be used for all exter-
nal reporting. There is usually a requirement for some “below the line” adjustments to
bring the income state in line with generally accepted accounting principles (GAAP).
These adjustments include any change of inventory value between now and last month,
group and corporate overhead allocations, and other miscellaneous adjustments like

exchange rate gains and losses. The “bottom line” of the adjusted statement will of
course be the same as the traditional statements. There is no formal change of account-
ing method and the bottom line will therefore be the same.
Inventory Valuation
An important aspect of financial control is the evaluation of inventory. Lean manufac-
turing always leads to substantial inventory reductions. When inventories are low and
under good control (using pull systems, single-piece flow, supplier partnerships, etc.),
the valuation of inventory becomes much less complex. Lean Accounting contains a
number of methods for valuing inventory that are simple, accurate, and often visual.
Several of these methods do not require any computer-based inventory tracking at all.
Compliance to Regulatory Requirements
WT
A question that always comes up when discussing lean accounting is whether these meth-
ods comply with regulatory accounting requirements and GAAP (generally accepted ac-
counting principles). Lean accounting fully complies with all statutory and generally ac-
cepted accounting requirements in the United States and Europe, including the unique
requirements of German, Swiss, and Italian regulation. Lean accounting also complies
with the increasingly popular International Accounting Standards (IAS) that is seeking
to create a single world-wide approach. When moving from traditional accounting meth-
ods to lean accounting there is no “change of accounting” because the external reporting
outcome of lean accounting uses the same accrual based actual costing required by GAAP
and statutory regulations. There is an argument that lean accounting lends itself better to
statutory regulations because they require reporting at actual cost. Lean accounting uses
actual costs throughout, whereas traditional accounting uses standard costs that must
then be adjusted to actual costing for external reporting.
Further Simplifying the Accounting Processes

Transaction Elimination
Traditional companies use complex, transaction-based information systems like MRPII
or Enterprise Systems (ERP) to maintain financial and operational control of their pro-
cesses. Lean organizations bring their process under good control using lean methods,
visual control, low inventories, short lead times, and – most importantly – identifying
the root causes of the problems that create the lack of control. Once these root causes
have been addressed and the process brought under control, it is no longer necessary
to use these complex and wasteful transactional systems, and they can be gradually
eliminated.
In manufacturing companies the transaction-heavy documents tend to be production

work orders and inventory tracking on the computer. Over time, as lean methods elimi-

nate the need for these documents in favor of visual management, these documents can
be eliminated and the thousands of wasteful transaction can be eliminated. One large
North American aircraft manufacturer eliminated three trillion transactions in one
year using this approach. The “ideal” for a manufacturing company is to have only two
types of transactions within the production processes; the receipt of raw materials and
the shipment of finished product. These two transactions are legally required owing to
change of ownership. Everything else within the production process can be addressed
better, quicker, easier, and less wastefully using visual, lean methods.
Other kinds of service companies like banks, healthcare, insurance and others, have
similarly transaction-heavy processes that can be radically simplified through the use
of lean methods of control. Almost every company can largely eliminate their purchas-
ing and accounts payable processes together with the wasteful and complicated three-
way matching through using lean methods.
WT
Accounting controls have always been important, and it is essential that Lean Account-
ing enhance these controls, and does not weaken them. It is important to bring the
company’s auditors into the Lean Accounting process at the earliest stages. A primary
tool to ensure that Lean Accounting changes are made prudently is the Transaction
Elimination Matrix. Using the transaction elimination matrix we can determine what
lean methods must be in place to enable us to eliminate traditional, transaction-based
processes without jeopardizing financial (or operational) control. These decisions are
made ahead of time and become a part of the overall lean transformation; in some cases
driving the lean changes and improvements.
Focusing on Customer Value

Target Costing
Target costing is the tool for understanding how the company creates value for the
customer and what must be done to create more value. Target Costing is used when
new products are being designed and/or when the value stream team needs to under-
stand the changes required to increase the value for the customers. The outcome of this
highly cross-functional and cooperative process is a series of initiatives to create more
value for the customer and to bring the product costs into line with the company’s need
for short and long term financial stability. These improvement initiatives encompass
sales and marketing, product design, operations, logistics, and administrative process-
es within the company.
Value-based Pricing
The first of the five principles of lean thinking is value to the customer. The prices of
products and services are set according to the value created for the customers. Lean ac-
counting includes methods for calculating the amount of value created by a company’s

products and services, and form that knowledge to establish prices. This approach is in
stark contrast to many traditional companies that calculate their prices using the cost-
plus method. The cost-plus method establishes prices by calculating a fully absorbed
product cost and then adding on an acceptable profit margin. This cost-plus methods
leads to serious errors in pricing because it creates a false linkage between price and
cost. The price of a product is unrelated to the cost of manufacturing and supplying
that product. The price of a product or services is entirely determined by the amount
of value created by the product in the eyes of the customers. Lean accounting methods
enable value-based pricing.
Lean Higher Education

Lean Higher Education (LHE) refers to the adaptation of lean thinking to higher educa-
tion, typically with the goal of improving the efficiency and effectiveness of operations.
WT
Lean, originally developed at the Toyota Motor Corporation, is a management philoso-
phy that emphasizes “respect for people” and “continuous improvement” as core tenets.
Lean encourages employees at all organizational levels to re-imagine services from a
customer’s point of view, removing process steps that do not add value and emphasiz-
ing steps that add the most value. While the concept of “customers” and “products” is
controversial in higher education settings, there are certainly diverse stakeholders who
are interested in the success of colleges and universities, the most common of which
are students, faculty, administrators, potential employers and various levels of govern-
ment.
Lean in higher education has been applied both to administrative and academic ser-
vices. Balzer (2010) described such initiatives within university settings, including the
critical factors for success and ways to measure progress. He noted that LHE can be
effective to respond to higher education’s heightened expectations, reducing expens-
es in an era of rising costs, meeting demands of public accountability, and leveraging
institutional resources to fulfill the educational, scholarship, and outreach missions of
higher education. A comprehensive literature review examining Lean’s impact on high-
er education has been published. The authors reported that Lean has a significant and
measurable impact when used to improve academic and administrative operations.
Such improvements are effective at the department/unit level or throughout and entire
institution. However, the authors noted that implementing Lean is a serious undertak-
ing that is most impactful if it involves long-term, strategic planning.
Though the application of Lean management in higher education is more prevalent

in administrative processes (e.g., admissions, registration, HR, and procurement) it
also has been applied to academic processes (e.g., course design and teaching, improv-
ing degree programs, student feedback, and handling of assignments) in an increasing
number of cases.
Pioneering academic institutions who have implemented Lean include: Cardiff Uni-

versity (Wales), Edinburgh Napier University (Scotland), Michigan Technological Uni-

versity (USA), Rensselaer Polytechnic Institute (USA), University of Aberdeen (Scot-
land), University of Central Oklahoma (USA), University of St. Andrews (Scotland),
Winona State University (USA) and others. A group of universities in the U.K. have
formed LeanHEHub . In Scotland, the Scottish Higher Education Improvement Net-
work (SHEIN) is a collaborative network of HE professionals working within the area
of continuous improvement. SHEIN exists to encourage the sharing of resources and
best practice, online and face-to-face.
Lean Principles
Of great importance in the application of Lean management in any organization is the
recognition and daily practice of the Lean principles: “Continuous Improvement” and
“Respect for People.” The “Respect for People” principle is challenging for manage-
WT
ment to implement, because most managers have risen to their level of responsibility
based on their superior “fire-fighting” skills. With Lean, managers are coaches who
guide their employees through a problem solving process. The employee learns how
to ask themselves the questions that enable them to solve problems on their own, with
the same or better quality that the manager would have achieved. Problems occur
when managers cannot relinquish control, resulting in zero-sum (win-lose) outcomes
for people and inferior results. In other words, one party gains at another party’s ex-
pense, and the losers are much less willing to participate in continuous improvement.
This outcome impedes teamwork and information flows, and discourages daily efforts
by administration, faculty, and staff to improve processes. In order to function prop-
erly, Lean management must be understood and practiced in a plus-sum (win-win)
manner. The “Respect for People” principle is required in order to sustain continuous
improvement.
Lean Practices
The origins of Lean practices date from late 19th- and early 20th-century industrial
engineering. Lean practices have evolved over the decades since then to become much
easier for non-specialists to understand and use. It is now common for people with
backgrounds and interests far from industrial engineering to become highly compe-
tent Lean management practitioners. Therefore, the Lean management system has the
benefit that everyone in an organization can apply the practices without the need for
specialists.
Seminal work in the application of Lean to academic processes was done by Prof. M.L.
“Bob” Emiliani when he was at Rensselaer Polytechnic University in the early 2000s
and is described in two papers: M.L. “Bob” Emiliani (2004) “Improving Business School
Courses by Applying Lean Principles and Practices,” and M.L. “Bob” Emiliani (2005)
“Using Kaizen to Improve Graduate Business School Degree Programs,”. The former pa-
per describes what individual faculty can do to improve their courses and delivery using

Lean principles and practices. The latter paper describes what teams of faculty, staff,
administrators, students, alumni, and employers can do to improve their courses using
kaizen (literal translation: “change for the better”). Prof. Emiliani also produced a Kaizen
Team Leader’s Manual for improving academic courses and programs based on his work.
The use of Lean practices in academic processes are described in two papers written
by Prof. Emiliani cited above (Refs. 2,3), and in the book Lean Higher Education: In-
creasing the Value and Performance of University Processes.
Differences between Lean in Higher Education and Lean in other

Sectors
Lean in HE follows the same principles and practices of Lean management as applied
in service, manufacturing, or government sectors. Lean management readily takes into
WT
account the unique governance structures of higher education institutions. Lean man-
agement is responsive to the needs of multiple stakeholders in a non-zero-sum fashion
and is therefore well-suited for the governance and ongoing improvement of HEIs.
The business of teaching in, or the back office administration of, Higher Education
Institutions (HEI’s) is similar to Lean management practiced in other service sectors
because teaching and administration consist of repeatable transactional processes, in
whole or part. Guidance for Lean implementation in HE administration, and, to a less-
er extent in teaching, is presented in the book Lean Higher Education, Increasing the
Value and Performance of University Processes.
Impact of Lean in Higher Education

The impact of Lean in HE (namely in academic activities), have been studied and
found to be potentially beneficial. The benefits include lead-time reduction, increase
in throughput, lower cost, increased student satisfaction scores, etc. Reports analyzing
Lean in higher education indicate that Lean principles are being successfully applied.
Various HE stakeholders will likely perceive their organization to be substantially dif-
ferent or possess unique characteristics compared to other service organizations or
businesses using Lean management. These reports, as well as a wide range of empirical
results, show such perceptions to be erroneous.
Criticisms of Lean Management

The principal criticisms of Lean management are well known, relatively few in number,
and have been constant over time. Workers may view Lean management as undesirable
if it is incorrectly implemented, because it could make them work harder, they might
have less time to spend with customers, and, ultimately, they could lose their jobs. These
criticisms, which will surely be voiced by faculty and staff in HE, are predictable and the
result of zero-sum (win-lose) application of Lean management by senior managers.

Supporters of Lean might assert that Lean management can be conducted in a non-
zero-sum (win-win) manner—the criticism is simply a result of misapplication of the
central concepts.
References
• Morgan, John; Brenig-Jones, Martin (2015). Lean Six Sigma for Dummies, Third Revised Edition
(3rd ed.). John Wiley & Sons (published Nov 6, 2015). ISBN 978-1119067351
• Penenberg, Adam L. (8 September 2011). “Eric Ries is a Lean Startup machine”. Fast Company.
Retrieved 4 June 2015
• Paterson, James C. (2015). Lean auditing: driving added value and efficiency in internal au-
dit (1st ed.). Chichester, UK; Hoboken, NJ: John Wiley & Sons. p. 9. ISBN 9781118896884.
OCLC 890127776. doi:10.1002/9781119017066
• Greenwald, Ted (18 May 2012). “Upstart Eric Ries has the stage and the crowd is going wild”.
WT
Wired. Retrieved 4 June 2015
• George, Michael L. (2004). The Lean Six Sigma Pocket Toolbook: A Quick Reference Guide to 100
Tools for Improving Quality and Speed (1st ed.). McGraw-Hill Education. ISBN 978-0071441193
• Schreiber, Danny (5 April 2012). “U.S. CIO VanRoekel talks startups, savings, new tech in Iowa
visit”. Silicon Prairie News. Retrieved 4 June 2015
• Pyzdek, Thomas; Keller, Paul (2014). The Six Sigma Handbook, Fourth Edition (4th ed.). Mc-
Graw-Hill Education (published May 13, 2014). ISBN 978-0071840538
• Tam, Pui-Wing (20 May 2010). “Philosophy helps start-ups move faster”. The Wall Street Jour-
nal. Retrieved 4 June 2015
• Adler, Carlye (30 August 2011). “Ideas are overrated: startup guru Eric Ries’ radical new theory”.
Wired. Retrieved 4 June 2015
• Bass, Issa; Lawton, Barbara (2009). Lean Six Sigma Using SigmaXL and Minitab. McGraw-Hill
Education. ISBN 978-0071621304
• Fitz, Timothy (10 February 2009). “Continuous deployment at IMVU: doing the impossible fifty
times a day”. timothyfitz.wordpress.com. Retrieved 4 June 2015
• Maurya, Ash (27 February 2012). “Why Lean Canvas vs Business Model Canvas?”. leanstack.com.
• George, Michael L.; Rowlands, David; Kastle, Bill (2003). What is Lean Six Sigma?. McGraw-Hill
Education. ISBN 978-0071426688
• In September 2008, Ries coined the term lean startup on his blog, Startup Lessons Learned: Ries,
Eric (8 September 2008). “The lean startup”. startuplessonslearned.com. Retrieved 4 June 2015
• Kowansky, Elaine; Friberg, Norm (2006). How NOT To Implement Six Sigma: A manager’s guide
to ensuring the failure of the world’s greatest Quality Improvement and Waste Reducing Ma-
chine. Xilbris. ISBN 978-1425712266
• Loizos, Connie (26 May 2011). “’Lean Startup’ evangelist Eric Ries is just getting started”. PeHUB.

2
A Comprehensive Study of Lean
Manufacturing
Lean manufacturing is a managerial process that emphasizes on the elimination of
waste. It promotes those processes that add value by reducing those that do not. The
concept of waste has altered across time and the process but some of these are trans-
port, motion, overproduction, defects, etc. This chapter will provide an integrated un-
derstanding of lean manufacturing.
WT
Lean Manufacturing
Model of the “lean production” system
Lean manufacturing or lean production, often simply “lean”, is a systematic method for
waste minimization (“Muda”) within a manufacturing system without sacrificing pro-
ductivity. Lean also takes into account waste created through overburden (“Muri”) and
waste created through unevenness in work loads (“Mura”). Working from the perspec-
tive of the client who consumes a product or service, “value” is any action or process
that a customer would be willing to pay for.
Lean manufacturing makes obvious what adds value, by reducing everything else
(which not adding value). This management philosophy is derived mostly from the
Toyota Production System (TPS) and identified as “lean” only in the 1990s. TPS is re-
nowned for its focus on reduction of the original Toyota seven wastes to improve over-
all customer value, but there are varying perspectives on how this is best achieved. The
steady growth of Toyota, from a small company to the world’s largest automaker, has
focused attention on how it has achieved this success.

Overview
Lean principles are derived from the Japanese manufacturing industry. The term was
first coined by John Krafcik in his 1988 article, “Triumph of the Lean Production Sys-
tem”, based on his master’s thesis at the MIT Sloan School of Management. Krafcik had
been a quality engineer in the Toyota-GM NUMMI joint venture in California before
joining MIT for MBA studies. Krafcik’s research was continued by the International
Motor Vehicle Program (IMVP) at MIT, which produced the international best-selling
book co-authored by Jim Womack, Daniel Jones, and Daniel Roos called The Machine
That Changed the World. A complete historical account of the IMVP and how the term
“lean” was coined is given by Holweg (2007).
For many, lean is the set of “tools” that assist in the identification and steady elimina-
tion of waste. As waste is eliminated quality improves while production time and cost
WT
are reduced. A non exhaustive list of such tools would include: SMED, value stream
mapping, Five S, Kanban (pull systems), poka-yoke (error-proofing), total productive
maintenance, elimination of time batching, mixed model processing, rank order clus-
tering, single point scheduling, redesigning working cells, multi-process handling and
control charts (for checking mura).
There is a second approach to lean manufacturing, which is promoted by Toyota, called The
Toyota Way, in which the focus is upon improving the “flow” or smoothness of work, there-
by steadily eliminating mura (“unevenness”) through the system and not upon ‘waste re-
duction’ per se. Techniques to improve flow include production leveling, “pull” production
(by means of kanban) and the Heijunka box. This is a fundamentally different approach
from most improvement methodologies, and requires considerably more persistence than
basic application of the tools, which may partially account for its lack of popularity.
The difference between these two approaches is not the goal itself, but rather the prime
approach to achieving it. The implementation of smooth flow exposes quality problems
that already existed, and thus waste reduction naturally happens as a consequence. The
advantage claimed for this approach is that it naturally takes a system-wide perspec-
tive, whereas a waste focus sometimes wrongly assumes this perspective.
Both lean and TPS can be seen as a loosely connected set of potentially competing
principles whose goal is cost reduction by the elimination of waste. These principles
include: pull processing, perfect first-time quality, waste minimization, continuous
improvement, flexibility, building and maintaining a long term relationship with sup-
pliers, autonomation, load leveling and production flow and visual control. The dis-
connected nature of some of these principles perhaps springs from the fact that the
TPS has grown pragmatically since 1948 as it responded to the problems it saw within
its own production facilities. Thus what one sees today is the result of a ‘need’ driven
learning to improve where each step has built on previous ideas and not something
based upon a theoretical framework.

A Comprehensive Study of Lean Manufacturing 31
Toyota’s view is that the main method of lean is not the tools, but the reduction of three
types of waste: muda “non-value-adding work), muri (overburden), and mura (un-
evenness), to expose problems systematically and to use the tools where the ideal can-
not be achieved. From this perspective, the tools are workarounds adapted to different
situations, which explains any apparent incoherence of the principles above.
Also known as the flexible mass production, the TPS has two pillar concepts: Just-
in-time (JIT) or “flow”, and “autonomation” (smart automation). Adherents of the
Toyota approach would say that the smooth flowing delivery of value achieves all
the other improvements as side-effects. If production flows perfectly (meaning it
is both “pull” and with no interruptions) then there is no inventory; if customer
valued features are the only ones produced, then product design is simplified and
effort is only expended on features the customer values. The other of the two TPS
pillars is the very human aspect of autonomation, whereby automation is achieved
WT
with a human touch. In this instance, the “human touch” means to automate so that
the machines/systems are designed to aid humans in focusing on what the humans
do best.
Lean implementation emphasizes the importance of optimizing work flow through

strategic operational procedures while minimizing waste and being adaptable. Flexi-
bility is required to allow production leveling (Heijunka) using tools such as SMED,
but have their analogues in other processes such as research and development (R&D).
However, adaptability is often constrained, and therefore may not require significant
investment. More importantly, all of these concepts have to be acknowledged by em-
ployees who develop the products and initiate processes that deliver value. The cultural
and managerial aspects of lean are arguably more important than the actual tools or
methodologies of production itself. There are many examples of lean tool implementa-
tion without sustained benefit, and these are often blamed on weak understanding of
lean throughout the whole organization.
Lean aims to enhance productivity by simplifying the operational structure enough to

understand, perform and manage the work environment. To achieve these three goals
simultaneously, one of Toyota’s mentoring methodologies (loosely called Senpai and
Kohai which is Japanese for senior and junior), can be used to foster lean thinking
throughout the organizational structure from the ground up. The closest equivalent to
Toyota’s mentoring process is the concept of “Lean Sensei,” which encourages compa-
nies, organizations, and teams to seek third-party experts that can provide advice and
coaching.
In 1999, Spear and Bowen identified four rules which characterizes the “Toyota DNA”:
1. All work shall be highly specified as to content, sequence, timing, and outcome.
2. Every customer-supplier connection must be direct, and there must be an un-

ambiguous yes or no way to send requests and receive responses.

3. The pathway for every product and service must be simple and direct.
4. Any improvement must be made in accordance with the scientific method, un-
der the guidance of a teacher, at the lowest possible level in the organization.
History
Pre-20th Century
WT
The printer Benjamin Franklin contributed greatly to waste reduction thinking
Most of the basic goals of lean manufacturing and waste reduction were derived from
Benjamin Franklin through documented examples. Poor Richard’s Almanack says of
wasted time, “He that idly loses 5s. worth of time, loses 5s., and might as prudently
throw 5s. into the river.” He added that avoiding unnecessary costs could be more prof-
itable than increasing sales: “A penny saved is two pence clear. A pin a-day is a groat
a-year. Save and have.”
Again Franklin’s The Way to Wealth says the following about carrying unnecessary
inventory. “You call them goods; but, if you do not take care, they will prove evils to
some of you. You expect they will be sold cheap, and, perhaps, they may [be bought]
for less than they cost; but, if you have no occasion for them, they must be dear to you.
Remember what Poor Richard says, ‘Buy what thou hast no need of, and ere long thou
shalt sell thy necessaries.’ In another place he says, ‘Many have been ruined by buying
good penny worths’.” Henry Ford cited Franklin as a major influence on his own busi-
ness practices, which included Just-in-time manufacturing.
The accumulation of waste and energy within the work environment was noticed by
motion efficiency expert Frank Gilbreth, who witnessed the inefficient practices of
masons who often bend over to gather bricks from the ground. The introduction of
a non-stooping scaffold, which delivered the bricks at waist level, allowed masons to
work about three times as quickly, and with the least amount of effort.

20th Century
Frederick Winslow Taylor
WT
Frederick Winslow Taylor, the father of scientific management, introduced what are
now called standardization and best practice deployment. In Principles of Scientific
Management, (1911), Taylor said: “And whenever a workman proposes an improve-
ment, it should be the policy of the management to make a careful analysis of the new
method, and if necessary conduct a series of experiments to determine accurately the
relative merit of the new suggestion and of the old standard. And whenever the new
method is found to be markedly superior to the old, it should be adopted as the stan-
dard for the whole establishment.”
Taylor also warned explicitly against cutting piece rates (or, by implication, cutting wages or
discharging workers) when efficiency improvements reduce the need for raw labor: “...after
a workman has had the price per piece of the work he is doing lowered two or three times
as a result of his having worked harder and increased his output, he is likely entirely to lose
sight of his employer’s side of the case and become imbued with a grim determination to
have no more cuts if soldiering [marking time, just doing what he is told] can prevent it.”
Shigeo Shingo, the best-known exponent of single minute exchange of die and er-
ror-proofing or poka-yoke, cites Principles of Scientific Management as his inspiration.
American industrialists recognized the threat of cheap offshore labor to American

workers during the 1910s, and explicitly stated the goal of what is now called lean man-
ufacturing as a countermeasure. Henry Towne, past President of the American Soci-
ety of Mechanical Engineers, wrote in the Foreword to Frederick Winslow Taylor’s
Shop Management (1911), “We are justly proud of the high wage rates which prevail
throughout our country, and jealous of any interference with them by the products of
the cheaper labor of other countries. To maintain this condition, to strengthen our con-
trol of home markets, and, above all, to broaden our opportunities in foreign markets
where we must compete with the products of other industrial nations, we should wel-
come and encourage every influence tending to increase the efficiency of our productive
processes.”

Henry Ford
Henry Ford
WT
Henry Ford initially ignored the impact of waste accumulation while developing his
mass assembly manufacturing system. Charles Buxton Going wrote in 1915:
Ford’s success has startled the country, almost the world, financially, industri-
ally, mechanically. It exhibits in higher degree than most persons would have
thought possible the seemingly contradictory requirements of true efficiency,
which are: constant increase of quality, great increase of pay to the workers,
repeated reduction in cost to the consumer. And with these appears, as at once
cause and effect, an absolutely incredible enlargement of output reaching some-
thing like one hundredfold in less than ten years, and an enormous profit to the
manufacturer.
Ford, in My Life and Work (1922), provided a single-paragraph description that en-
compasses the entire concept of waste:
I believe that the average farmer puts to a really useful purpose only about 5%
of the energy he expends.... Not only is everything done by hand, but seldom is
a thought given to a logical arrangement. A farmer doing his chores will walk up
and down a rickety ladder a dozen times. He will carry water for years instead
of putting in a few lengths of pipe. His whole idea, when there is extra work to
do, is to hire extra men. He thinks of putting money into improvements as an
expense.... It is waste motion— waste effort— that makes farm prices high and
profits low.
Poor arrangement of the workplace—a major focus of the modern kaizen—and doing
a job inefficiently out of habit—are major forms of waste even in modern workplaces.
Ford also pointed out how easy it was to overlook material waste. A former employee,
Harry Bennett, wrote:
One day when Mr. Ford and I were together he spotted some rust in the slag
that ballasted the right of way of the D. T. & I [railroad]. This slag had been

dumped there from our own furnaces. ‘You know,’ Mr. Ford said to me, ‘there’s
iron in that slag. You make the crane crews who put it out there sort it over, and
take it back to the plant.’
In other words, Ford saw the rust and realized that the steel plant was not recovering
all of the iron.
Ford’s early success, however, was not sustainable. As James P. Womack and Daniel
Jones pointed out in “Lean Thinking”, what Ford accomplished represented the “spe-
cial case” rather than a robust lean solution. The major challenge that Ford faced was
that his methods were built for a steady-state environment, rather than for the dynamic
conditions firms increasingly face today. Although his rigid, top-down controls made
it possible to hold variation in work activities down to very low levels, his approach
did not respond well to uncertain, dynamic business conditions; they responded par-
WT
ticularly badly to the need for new product innovation. This was made clear by Ford’s
precipitous decline when the company was forced to finally introduce a follow-on to the
Model T.
Design for Manufacture (DFM) is a concept derived from Ford which emphasizes the
importance of standardizing individual parts as well as eliminating redundant compo-
nents in My Life and Work. This standardization was central to Ford’s concept of mass
production, and the manufacturing “tolerances”, or upper and lower dimensional limits
that ensured interchangeability of parts became widely applied across manufacturing.
Decades later, the renowned Japanese quality guru, Genichi Taguchi, demonstrated that
this “goal post” method of measuring was inadequate. He showed that “loss” in capabili-
ties did not begin only after exceeding these tolerances, but increased as described by the
Taguchi Loss Function at any condition exceeding the nominal condition. This became
an important part of W. Edwards Deming’s quality movement of the 1980s, later helping
to develop improved understanding of key areas of focus such as cycle time variation in
improving manufacturing quality and efficiencies in aerospace and other industries.
While Ford is renowned for his production line, it is often not recognized how much
effort he put into removing the fitters’ work to make the production line possible. Until
Ford, a car’s components always had to be fitted or reshaped by a skilled engineer at the
point of use, so that they would connect properly. By enforcing very strict specification
and quality criteria on component manufacture, he eliminated this work almost entire-
ly, reducing manufacturing effort by between 60-90%. However, Ford’s mass produc-
tion system failed to incorporate the notion of “pull production” and thus often suffered
from over-production.
Toyota Develops TPS

Toyota’s development of ideas that later became lean may have started at the turn
of the 20th century with Sakichi Toyoda, in a textile factory with looms that stopped

themselves when a thread broke. This became the seed of autonomation and Jidoka.
Toyota’s journey with just-in-time (JIT) may have started back in 1934 when it moved
from textiles to produce its first car. Kiichiro Toyoda, founder of Toyota Motor Corpo-
ration, directed the engine casting work and discovered many problems in their man-
ufacturing. He decided he must stop the repairing of poor quality by intense study of
each stage of the process. In 1936, when Toyota won its first truck contract with the
Japanese government, his processes hit new problems and he developed the “Kaizen”
improvement teams.
WT Sakichi Toyoda
Levels of demand in the Post War economy of Japan were low and the focus of mass
production on lowest cost per item via economies of scale therefore had little applica-
tion. Having visited and seen supermarkets in the USA, Taiichi Ohno recognised the
scheduling of work should not be driven by sales or production targets but by actual
sales. Given the financial situation during this period, over-production had to be avoid-
ed and thus the notion of Pull (build to order rather than target driven Push) came to
underpin production scheduling.
It was with Taiichi Ohno at Toyota that these themes came together. He built on the
already existing internal schools of thought and spread their breadth and use into what
has now become the Toyota Production System (TPS). It is principally from the TPS
(which was widely referred to in the 1980s as just-in-time manufacturing), but now in-
cluding many other sources, that lean production is developing. Norman Bodek wrote
the following in his foreword to a reprint of Ford’s Today and Tomorrow:
I was first introduced to the concepts of just-in-time (JIT) and the Toyota production
system in 1980. Subsequently I had the opportunity to witness its actual application at
Toyota on one of our numerous Japanese study missions. There I met Mr. Taiichi Ohno,
the system’s creator. When bombarded with questions from our group on what inspired
his thinking, he just laughed and said he learned it all from Henry Ford’s book.” The
scale, rigor and continuous learning aspects of TPS have made it a core concept of lean.

Types of Waste
Although the elimination of waste may seem like a simple and clear subject, it is no-
ticeable that waste is often very conservatively identified. This then hugely reduces the
potential of such an aim. The elimination of waste is the goal of lean, and Toyota de-
fined three broad types of waste: muda, muri and mura; it should be noted that for
many lean implementations this list shrinks to the first waste type only with reduced
corresponding benefits.
To illustrate the state of this thinking Shigeo Shingo observed that only the last turn of
a bolt tightens it—the rest is just movement. This ever finer clarification of waste is key
to establishing distinctions between value-adding activity, waste and non-value-adding
work. Non-value adding work is waste that must be done under the present work con-
ditions. One key is to measure, or estimate, the size of these wastes, to demonstrate the
WT
effect of the changes achieved and therefore the movement toward the goal.
The “flow” (or smoothness) based approach aims to achieve JIT, by removing the vari-
ation caused by work scheduling and thereby provide a driver, rationale or target and
priorities for implementation, using a variety of techniques. The effort to achieve JIT
exposes many quality problems that are hidden by buffer stocks; by forcing smooth
flow of only value-adding steps, these problems become visible and must be dealt with
explicitly.
Muri is all the unreasonable work that management imposes on workers and machines
because of poor organization, such as carrying heavy weights, moving things around,
dangerous tasks, even working significantly faster than usual. It is pushing a person
or a machine beyond its natural limits. This may simply be asking a greater level of
performance from a process than it can handle without taking shortcuts and informally
modifying decision criteria. Unreasonable work is almost always a cause of multiple
variations.
To link these three concepts is simple in TPS and thus lean. Firstly, muri focuses on the
preparation and planning of the process, or what work can be avoided proactively by
design. Next, mura then focuses on how the work design is implemented and the elim-
ination of fluctuation at the scheduling or operations level, such as quality and volume.
Muda is then discovered after the process is in place and is dealt with reactively. It is
seen through variation in output. It is the role of management to examine the muda,
in the processes and eliminate the deeper causes by considering the connections to the
muri and mura of the system. The muda and mura inconsistencies must be fed back to
the muri, or planning, stage for the next project.
A typical example of the interplay of these wastes is the corporate behaviour of “making
the numbers” as the end of a reporting period approaches. Demand is raised to ‘make
plan,’ increasing (mura), when the “numbers” are low, which causes production to try
to squeeze extra capacity from the process, which causes routines and standards to be

modified or stretched. This stretch and improvisation leads to muri-style waste, which
leads to downtime, mistakes and back flows, and waiting, thus the muda of waiting,
correction and movement.
The original seven mudas (TIM WOOD) are:
• Transport (moving products that are not actually required to perform the pro-
cessing)
• Inventory (all components, work in process, and finished product not being
processed)
• Motion (people or equipment moving or walking more than is required to per-

form the processing)
WT
• Waiting (waiting for the next production step, interruptions of production
during shift change)
• Overproduction (production ahead of demand)
• Over Processing (resulting from poor tool or product design creating activity)
• Defects (the effort involved in inspecting for and fixing defects)
Eventually, an eighth “muda” was defined by Womack et al. (2003); it was described
as manufacturing goods or services that do not meet customer demand or specifica-
tions. Many others have added the “waste of unused human talent” to the original
seven wastes. For example, six sigma includes the waste of Skills, referred to as
“under-utilizing capabilities and delegating tasks with inadequate training”. Other
additional wastes added were for example “space”. These wastes were not originally
a part of the seven deadly wastes defined by Taiichi Ohno in TPS, but were found
to be useful additions in practice. In 1999 Geoffrey Mika in his book, “Kaizen Event
Implementation Manual” added three more forms of waste that are now universally
accepted; The waste associated with working to the wrong metrics or no metrics,
the waste associated with not utilizing a complete worker by not allowing them
to contribute ideas and suggestions and be part of Participative Management, and
lastly the waste attributable to improper use of computers; not having the proper
software, training on use and time spent surfing, playing games or just wasting
time. For a complete listing of the “old” and “new” wastes see Bicheno and Holweg
(2009).
The identification of non-value-adding work, as distinct from wasted work, is critical to

identifying the assumptions behind the current work process and to challenging them
in due course. Breakthroughs in SMED and other process changing techniques rely
upon clear identification of where untapped opportunities may lie if the processing
assumptions are challenged.

Lean Implementation Develops from TPS

Lean Leadership
The role of the leaders within the organization is the fundamental element of sustaining
the progress of lean thinking. Experienced kaizen members at Toyota, for example, often
bring up the concepts of Senpai, Kohai, and Sensei, because they strongly feel that trans-
ferring of Toyota culture down and across Toyota can only happen when more experi-
enced Toyota Sensei continuously coach and guide the less experienced lean champions.
One of the dislocative effects of lean is in the area of key performance indicators (KPI).
The KPIs by which a plant/facility are judged will often be driving behaviour, because
the KPIs themselves assume a particular approach to the work being done. This can
be an issue where, for example a truly lean, Fixed Repeating Schedule (FRS) and JIT
approach is adopted, because these KPIs will no longer reflect performance, as the as-
WT
sumptions on which they are based become invalid. It is a key leadership challenge to
manage the impact of this KPI chaos within the organization.
Similarly, commonly used accounting systems developed to support mass production

are no longer appropriate for companies pursuing lean. Lean accounting provides truly
lean approaches to business management and financial reporting.
After formulating the guiding principles of its lean manufacturing approach in the Toyota
Production System (TPS), Toyota formalized in 2001 the basis of its lean management: the
key managerial values and attitudes needed to sustain continuous improvement in the long
run. These core management principles are articulated around the twin pillars of Continu-
ous Improvement (relentless elimination of waste) and Respect for People (engagement in
long term relationships based on continuous improvement and mutual trust).
This formalization stems from problem solving. As Toyota expanded beyond its home
base for the past 20 years, it hit the same problems in getting TPS properly applied
that other western companies have had in copying TPS. Like any other problem, it has
been working on trying a series of countermeasures to solve this particular concern.
These countermeasures have focused on culture: how people behave, which is the most
difficult challenge of all. Without the proper behavioral principles and values, TPS can
be totally misapplied and fail to deliver results. As with TPS, the values had originally
been passed down in a master-disciple manner, from boss to subordinate, without any
written statement on the way. Just as with TPS, it was internally argued that formal-
izing the values would stifle them and lead to further misunderstanding. However, as
Toyota veterans eventually wrote down the basic principles of TPS, Toyota set to put
the Toyota Way into writing to educate new joiners.
Continuous Improvement breaks down into three basic principles:
1. Challenge: Having a long term vision of the challenges one needs to face to

realize one’s ambition (what we need to learn rather than what we want to do
and then having the spirit to face that challenge). To do so, we have to challenge
ourselves every day to see if we are achieving our goals.
2. Kaizen: Good enough never is, no process can ever be thought perfect, so oper-
ations must be improved continuously, striving for innovation and evolution.
3. Genchi Genbutsu: Going to the source to see the facts for oneself and make the
right decisions, create consensus, and make sure goals are attained at the best
possible speed.
Respect For People is less known outside of Toyota, and essentially involves two defin-
ing principles:
1. Respect: Taking every stakeholders’ problems seriously, and making every ef-
WT
fort to build mutual trust. Taking responsibility for other people reaching their
objectives.
2. Teamwork: This is about developing individuals through team problem-solv-
ing. The idea is to develop and engage people through their contribution to
team performance. Shop floor teams, the whole site as team, and team Toyota
at the outset.
Differences from TPS

While lean is seen by many as a generalization of the Toyota Production System into
other industries and contexts, there are some acknowledged differences that seem to
have developed in implementation:
1. Seeking profit is a relentless focus for Toyota exemplified by the profit maxi-
mization principle (Price – Cost = Profit) and the need, therefore, to practice
systematic cost reduction (through TPS or otherwise) to realize benefit. Lean
implementations can tend to de-emphasise this key measure and thus become
fixated with the implementation of improvement concepts of “flow” or “pull”.
However, the emergence of the “value curve analysis” promises to directly tie
lean improvements to bottom-line performance measurements.
2. Tool orientation is a tendency in many programs to elevate mere tools (stan-

dardized work, value stream mapping, visual control, etc.) to an unhealthy sta-
tus beyond their pragmatic intent. The tools are just different ways to work
around certain types of problems but they do not solve them for you or always
highlight the underlying cause of many types of problems. The tools employed
at Toyota are often used to expose particular problems that are then dealt with,
as each tool’s limitations or blindspots are perhaps better understood. So, for
example, Value Stream Mapping focuses upon material and information flow
problems (a title built into the Toyota title for this activity) but is not strong on

Metrics, Man or Method. Internally they well know the limits of the tool and
understood that it was never intended as the best way to see and analyze every
waste or every problem related to quality, downtime, personnel development,
cross training related issues, capacity bottlenecks, or anything to do with prof-
its, safety, metrics or morale, etc. No one tool can do all of that. For surfacing
these issues other tools are much more widely and effectively used.
3. Management technique rather than change agents has been a principle in Toy-
ota from the early 1950s when they started emphasizing the development of
the production manager’s and supervisors’ skills set in guiding natural work
teams and did not rely upon staff-level change agents to drive improvements.
This can manifest itself as a “Push” implementation of lean rather than “Pull”
by the team itself. This area of skills development is not that of the change agent
specialist, but that of the natural operations work team leader. Although less
WT
prestigious than the TPS specialists, development of work team supervisors in
Toyota is considered an equally, if not more important, topic merely because
there are tens of thousands of these individuals. Specifically, it is these manu-
facturing leaders that are the main focus of training efforts in Toyota since they
lead the daily work areas, and they directly and dramatically affect quality, cost,
productivity, safety, and morale of the team environment. In many companies
implementing lean the reverse set of priorities is true. Emphasis is put on de-
veloping the specialist, while the supervisor skill level is expected to somehow
develop over time on its own.
4. Lack of understanding is one of the key reasons that a large share of lean manu-
facturing projects in the West fail to bring any benefit. In Factory Physics, Hopp
and Spearman describe this as romantic JIT, where the belief in the methods is
more important than the actual understanding and results. In this aspect, lean
manufacturing is more of a religion than a science. Others have compared it to
cargo cult science.
Lean Services
Lean principles have been successfully applied to various sectors and services. For ex-
ample, call center services use these principles to improve live agent call handling. By
combining Agent-assisted Automation and lean’s waste reduction practices, a company
reduced handle time, reduced between agent variability, reduced accent barriers, and
attained near perfect process adherence.
Lean principles also have applications to software development and maintenance as

well as other sectors of information technology (IT). More generally, the use of lean
in information technology has become known as Lean IT. Lean methods are also ap-
plicable to the public sector, but most results have been achieved using a much more
restricted range of techniques than lean provides.

The challenge in moving lean to services is the lack of widely available reference imple-
mentations to allow people to see how directly applying lean manufacturing tools and
practices can work and the impact it does have. This makes it more difficult to build the
level of belief seen as necessary for strong implementation. However, some research
does relate widely recognized examples of success in retail and even airlines to the
underlying principles of lean. Despite this, it remains the case that the direct manu-
facturing examples of ‘techniques’ or ‘tools’ need to be better ‘translated’ into a service
context to support the more prominent approaches of implementation, which has not
yet received the level of work or publicity that would give starting points for implemen-
tors. The upshot of this is that each implementation often ‘feels its way’ along as must
the early industrial engineering practices of Toyota. This places huge importance upon
sponsorship to encourage and protect these experimental developments.
Lean management is nowadays implemented also in non-manufacturing processes and
WT
administrative processes. In non-manufacturing processes is still huge potential for
optimization and efficiency increase.
Goals and Strategy

The espoused goals of lean manufacturing systems differ between various authors.
While some maintain an internal focus, e.g. to increase profit for the organization, oth-
ers claim that improvements should be done for the sake of the customer.
Some commonly mentioned goals are:
• Improve quality: To stay competitive in today’s marketplace, a company must
understand its customers’ wants and needs and design processes to meet their
expectations and requirements.
• Eliminate waste: Waste is any activity that consumes time, resources, or space
but does not add any value to the product or service.
• Reduce time: Reducing the time it takes to finish an activity from start to finish
is one of the most effective ways to eliminate waste and lower costs.
• Reduce total costs: To minimize cost, a company must produce only to custom-
er demand. Overproduction increases a company’s inventory costs because of
storage needs.
The strategic elements of lean can be quite complex, and comprise multiple elements.
Four different notions of lean have been identified:
1. Lean as a fixed state or goal (being lean)
2. Lean as a continuous change process (becoming lean)
3. Lean as a set of tools or methods (doing lean/toolbox lean)
4. Lean as a philosophy (lean thinking)

Examples: Lean strategy in the Global Supply Chain, and its Crisis
Strategy
Lean production has been adopted into other industries to promote productivity and
efficiency in an ever changing market. In global supply chain and outsource scale, In-
formation Technology is necessary and can deal with most of hard lean practices to
synchronise pull system in supply chains and value system. The manufacturing indus-
try can renew and change strategy of production just in time.
The supply chains take changes in deploying second factory or warehouse near their
major markets in order to react consumers’ need promptly instead of investing man-
ufacturing factories on the lost-cost countries. For instance, Dell sells computers di-
rectly from their website, cutting franchised dealers out of their supply chains. Then,
the firm use outsourced partners to produce its components, deliver components to
WT
their assembly plants on these main markets around the world, like America and
China.
Zara made decision of speeding their fashion to the consumers market by fast-produc-
ing cloths within five weeks with their local partners in Spain and never involved in
mass production to pursue new styles and keep products fresh.
The other way to avoid market risk and control the supply efficiently is to cut down in
stock. P&G has done the goal to co-operate with Walmart and other wholesales com-
panies by building the response system of stocks directly to the suppliers companies.
With the improvement of global scale supply chains, firms apply lean practices (JIT,
supplier partnership, and customer involvement) built between global firms and sup-
pliers intensively to connect with consumers markets efficiently.
Crisis
After years of success of Toyota’s Lean Production, the consolidation of supply chain
networks has brought Toyota to the position of being the world’s biggest carmaker in
the rapid expansion. In 2010, the crisis of safety-related problems in Toyota made oth-
er carmakers that duplicated Toyota’s supply chain system wary that the same recall
issue might happen to them.
James Womack had warned Toyota that cooperating with single outsourced suppliers
might bring unexpected problems. Indeed, the crisis cost a great fortune and left Toyo-
ta thinking whether the JIT practice has problems about outsourced suppliers without
enough experience and senior engineers could not achieve the monitoring job close to
their suppliers out of Japan. That is proven as the economy of scale becomes global,
the soft-learn practices become more important in their outsourced suppliers, if they
could keep good Sensei relationship with their partners and constantly modify produc-

tion process to perfection. Otherwise, Toyota begins to consider whether to have more
choices of suppliers of producing the same component, it might bring more safety on
risk-control and reduce the huge cost that might happen in the future.
The appliance of JIT in supply chain system is the key issue of Lean implementation in
global scale. How do the supply partners avoid causing production flow? Global firms
should make more suppliers who can compete with each other in order to get the best
quality and lower the risk of production flow at the same time.
Steps to Achieve Lean Systems

The following steps should be implemented to create the ideal lean manufacturing system:
• Design a simple manufacturing system
WT
• Recognize that there is always room for improvement
• Continuously improve the lean manufacturing system design
Design a Simple Manufacturing System

A fundamental principle of lean manufacturing is demand-based flow manufacturing.
In this type of production setting, inventory is only pulled through each production
center when it is needed to meet a customer’s order. The benefits of this goal include:
• Decreased cycle time
• Less inventory
• Increased productivity
• Increased capital equipment utilization
Continuous Improvement
A continuous improvement mindset is essential to reach the company’s goals. The term
“continuous improvement” means incremental improvement of products, processes, or
services over time, with the goal of reducing waste to improve workplace functionality, cus-
tomer service, or product performance. Lean is founded on the concept of continuous and
incremental improvements on product and process while eliminating redundant activities.
“The value of adding activities are simply only those things the customer is willing to pay
for, everything else is waste, and should be eliminated, simplified, reduced, or integrated”
(Rizzardo, 2003). Improving the flow of material through new ideal system layouts at the
customer’s required rate would reduce waste in material movement and inventory.
Measure
Overall equipment effectiveness (OEE) is a set of performance metrics that fit well in a

lean environment. Also, PMTS, methods-time measurement, cost analysis and perhaps
time study can be used to evaluate the wastes and IT effectiveness in the operational
processes. For example, Jun-Ing Ker and Yichuan Wang analyze two prescribing tech-
nologies, namely no carbon required (NCR) and digital scanning technologies to quan-
tify the advantages of the medication ordering, transcribing, and dispensing process in
a multi-hospital health system. With comparison between these two technologies,the
statistical analysis results show a significant reduction on process times by adopting
digital scanning technology. The results indicated a reduction of 54.5% in queue time,
32.4% in order entry time, 76.9% in outgoing delay time, and 67.7% in outgoing transit
time with the use of digital scanning technology.
Implementation Dilemma
One criticism of lean is that its practitioners may focus on tools and methodologies
WT
rather than on the philosophy and culture of lean. Consequently, adequate manage-
ment is needed in order to avoid failed implementation of lean methodologies. Another
pitfall is that management decides what solution to use without understanding the true
problem and without consulting shop floor personnel. As a result, lean implementa-
tions often look good to the manager but fail to improve the situation.
In addition, many of the popular lean initiatives, coming from the TPS, are solutions to
specific problems that Toyota was facing. Toyota, having an undesired current condi-
tion, determined what the end state would look like. Through much study, the gap was
closed, which resulted in many of the tools in place today. Often, when a tool is imple-
mented outside of TPS, a company believes that the solution lay specifically within one
of the popular lean initiatives. The tools which were the solution to a specific problem
for a specific company may not be able to be applied in exactly the same manner as de-
signed. Thus, the solution does not fit the problem and a temporary solution is created
vs. the actual root cause.
The lean philosophy aims to reduce costs while optimizing and improving performance.
Value stream mapping (VSM) and 5S are the most common approaches companies
take on their first steps towards making their organisation leaner. Lean actions can be
focused on the specific logistics processes, or cover the entire supply chain. For exam-
ple, you might start from analysis of SKUs, using several days to identify and draw each
SKUs path, evaluating all the participants from material suppliers to the consumer.
Conducting a gap analysis determines the company’s ‘must take’ steps to improve the
value stream and achieve the objective. Based on that evaluation, the improvement
group conducts the failure mode effects analysis (FMEA), in order to identify and pre-
vent risk factors. It is crucial for front-line workers to be involved in VSM activities
since they understood the process and can directly increase the efficiency. Although
the impact may be small and limited for each lean activity, implementing a series small
improvements incrementally along the supply chain can bring forth enhanced produc-
tivity.

After adopting the lean approach, both managers and employees experience change.
Therefore, decisive leaders are needed when starting on a lean journey. There are sev-
eral requirements to control the lean journey. First and most importantly, experts rec-
ommend that the organization have its own lean plan, developed by the lean Leader-
ship. In other words, the lean team provides suggestions for the leader who then makes
the actual decisions about what to implement. Second, coaching is recommended when
the organization starts off on its lean journey. They will impart their knowledge and
skills to shopfloor staff and the lean implementation will be much more efficient. Third,
the metrics or measurements used for measuring lean and improvements are extreme-
ly important. It will enable collection of the data required for informed decision-mak-
ing by a leader. One cannot successfully implement lean without sufficient aptitude at
measuring the process and outputs. To control and improve results going forward, one
must see and measure, i.e. map, what is happening now.
WT
Lean manufacturing is different from lean enterprise. Recent research reports the existence
of several lean manufacturing processes but of few lean enterprises. One distinguishing fea-
ture opposes lean accounting and standard cost accounting. For standard cost accounting,
SKUs are difficult to grasp. SKUs include too much hypothesis and variance, i.e., SKUs hold
too much indeterminacy. Manufacturing may want to consider moving away from tradi-
tional accounting and adopting lean accounting. In using lean accounting, one expected
gain is activity-based cost visibility, i.e., measuring the direct and indirect costs at each step
of an activity rather than traditional cost accounting that limits itself to labor and supplies.
Fixed Repeating Schedule

Fixed repeating schedule is a key element of the Toyota Production System and lean
manufacturing. As its name suggests it is a production schedule which is ‘unchanging’
and repeated perhaps daily or over a longer period such as two weeks or month. If it
can be implemented, economies of repetition start to become evident and suppliers and
customers can be assured in their own activity scheduling. What impedes this being
implemented is the uncertainty of demand and supply. Therefore whilst the scheduling
becomes simple, the activities to make the scheduling possible become more complex.
Thus the planning to move to FRS reveals issues which, if managed correctly, will re-
duce complexity overall and improve customer service.
History
Fixed repeating schedules have been invented all over the place by many organisations
as local solutions. Perhaps Ford’s early production technique was a trivial example since
by ensuring only one product, the black model T, the scheduling became simple as well.
The first widely publicised example with a systematic development was in the Toyota
Production System where an FRS smooths flow in the factory and therefore reduces the
waste of unevenness (or mura).

Implementation
Step 1: red Stream/green Stream
Since in all but the trivial example of constant demand there will actually be fluctua-
tions in required production, FRS is only part of a scheduling solution. The challenge
in the early steps of implementation is to isolate the maximum part of production that
can be fixed from the part of production that cannot. This isolation, at least in the early
stages, should extend to the supporting services as well as the value adding process
or gemba itself. Thus procurement, stock keeping, deliveries and so on should be run
separately for the fixed and non-fixed schedules. For example, this means two procure-
ment ‘contracts’; one for fixed deliveries of fixed amounts at regular intervals and one
for deliveries as otherwise requested. If this disciple in not complete then the uncer-
tainties in the unfixed side will ‘leak’ back into the fixed side which will then become
WT
unfixed for lack of resources.
To enforce this separation some factories have actually split the factory into two differ-
ent parts with each part being represented and painted a different colour. This sepa-
ration went as far as painting forklift trucks, tools, floor areas and stock containers in
their corresponding colour as well as selecting staff based upon their temperament to
work on one side or the other. The German factory director believed it was as close as
he could come to actually running two factories, one FRS and the other flexible.
The benefit of this work was the significant cost decreases that occurred in the FRS
‘factory’ which far outweighed the slight increase in costs in the flexible ‘factory’. In the
FRS ‘factory’ all costs and activities will be repeated which allows significant process
simplifications and time and cost reductions to occur across all functions. This is be-
cause the ‘exceptions’ to the standard process will no longer occur and schedules will
always be achieved so that process failure ‘safety net’ processes and equipment and
staff can be eliminated or re-deployed.
These benefits only accrue whilst the green stream/FRS products or services remain
predictable in demand. Therefore it is critical to ensure appropriate frequency reviews
of product demand to ensure promotion of stable products from the red stream and
demotion of now less stable demand products to the red stream. This may follow prod-
uct maturity curves where, after initial introduction, when demand stabilises products
move into the FRS and then later, when purchase enthusiasm wanes, they are removed
again. Seasonality can be built into FRS by having, for example, a summer and a winter
fixed schedule.
Step 2: speed up the FRS

The implementation of step 1 will have allowed people in the ‘FRS’ factory to run sim-
pler processes and to establish routines that were not possible in the schedule, resched-
ule, reschedule world that existed before, and may still exist in the ‘non-FRS factory’.

This will make the work more manageable and simplify the communications in the
‘factory’ that are so critical to performance. Because of this it will become much clearer
what sub-processes are limiting production capability and therefore which operations
can be simplified and improved. It is often the case that large stock levels pre-existed,
or were built to make FRS ‘possible’, the actual causes of these stocks can now be ad-
dressed by operational improvements to reduce lot sizes and improve reliability. Once
these have been done and supporting services have also adjusted then the aim is to
shorten the period of the repeat in ‘FRS’. This planning and then action will surface new
issues along the lines of the earlier phase which should in their turn be managed as a
priority. The shortening of the cycle will allow the reduction of finished goods and WIP
stocks as well whilst maintaining availability of stocks for customers. This cycle should
be repeated until management nerve breaks.
For Toyota the implementation of a fixed repeating schedule is one of the early steps
WT
in achieving production levelling which follows further steps to achieve lower lot sizes
gain the lower costs and flexibility this makes possible.
Lean Government
Lean Government refers to the application of lean production (also known as “Lean”)
principles and methods to both identify and then implement the most efficient, value
added way to provide government services. Government agencies have found that when
Lean is implemented, they see an improved understanding of how their own processes
work, that it facilitates the quick identification and implementation of improvements
and that it builds a culture of continuous improvement.
Lean for government focuses on governing and serving citizens with respect and con-
tinuously improving service delivery by cutting out “waste” and “inefficiency” in pro-
cesses; this in turn will result in better services overall, engaged civil servants as well
as more value for tax-supported programs and services. Generally, proponents also see
that a Lean government is a means to expand the capacity of government to provide
more services per unit of investment.
Common Methods and Approaches

Many Lean manufacturing methods have been successfully adapted to identify non-val-
ue added activities (waste) in administrative, transactional, and office processes that
are common in government agencies. Common Lean methods include:
• Value Stream Mapping (VSM) – Value stream mapping refers to the develop-
ment of a high‐level visual representation of a process flow that is involved in
delivering a product or service (called a “value stream”) to customers. VSM
events, which are typically 3–4 days, focus on identifying the sources of non‐
value added activity and prioritizing possible improvement activities.

• Kaizen – Kaizen means to change for the good of all and is based on the philoso-
phy of improvement, without regard to its size, type or duration. Kaizen activity
is often focused on rapid process improvement events (called kaizen events)
that bring together a cross‐functional team for 3‐5 days to study a specific pro-
cess followed by implementing process changes.
• 5S – 5S is the name of a workplace organizational method that uses a list of five

Japanese words which, when translated into English, start with the letter S—
Sort, Set in Order, Shine, Standardize, and Sustain.
As more and more government services are delivered electronically, Lean government
initiatives are commonly applications of Lean IT.
Lean government approaches typically have the following characteristics:
WT
• Take a customer service perspective that seeks to optimize value delivered to
the public, the regulated community, and/or other stakeholders;
• Involve employees and external stakeholders in continual improvements and
problem-solving activities;
• Deploy a rapid continuous improvement framework that emphasizes imple-
mentation over prolonged planning;
• Seek to reduce the complexity of processes and the variation in process outputs;
• Use performance metrics and visual controls to provide rapid feedback to im-
prove real-time decision-making and problem-solving; and
• Approach improvement activities using systems thinking.
Lean government does not necessarily promote low taxes, only efficient use of those
taxes levied. Tax policy is discerned by the legislative and executive branches of gov-
ernment with oversight of the judicial branch of government. Lean government is im-
plemented by the administrative function of government through executive order, leg-
islative mandate, or departmental administrative decisions. Lean government can be
applied in legislative, executive, and judicial branches of government.
Types of Waste
Several types of non-value added activity, or waste (muda in Japanese), are common in
government administrative and service processes. Lean methods focus on identifying
and eliminating these wastes. The list below identifies common administrative process
wastes.
Administrative Process Wastes with Examples

• Inventory = Backlog of Work, Excess Materials or Information

• Defects = Data Errors, Missing Info

• Overproduction = Unneeded Reports, Doing Work Not Requested
• Complexity = Unnecessary Process Steps
• Waiting = Unnecessary Approval Cycles
• Excess Motion = Trips to Remote Printer or Files
• Moving Items = Report Routing, File Storage
Wastes in administrative and service processes can relate to:
1. collection, use, and management of information
2. design and implementation of work processes
WT
3. the efficiency and effectiveness with which individuals work.
Lean Government Activity

Numerous government agencies, such as the U.S. Environmental Protection Agency
and the States of Iowa, Minnesota and Washington, are using Lean to improve the
quality, transparency and speed of government processes. As in the manufacturing and
service sectors, some government agencies are implementing Lean methods in con-
junction with Six Sigma process improvement approaches.
U.S. federal Government

Some examples of federal government organizations with active Lean Government ini-
tiatives include:
• U.S. Environmental Protection Agency
• U.S. Department of Defense
• U.S. Army
• U.S. Department of Agriculture
• U.S. Department of Housing and Urban Development
• U.S. Nuclear Regulatory Commission
U.S. State Government

Some examples of state government organizations with active Lean Government initia-
tives include:
• Colorado Department of Transportation (CDOT)

• Connecticut Department of Environmental Protection

• Connecticut Department of Labor
• Iowa Office of Lean Enterprise
• Minnesota Enterprise Lean
• State of Ohio Lean
• Washington State’s Results Washington
• New Hampshire Department of Environmental Services
• Wisconsin Department of Transportation (WisDOT)
The Environmental Council of the States (ECOS), in collaboration with the U.S. Envi-
WT
ronmental Protection Agency, works to support and coordinate information sharing
among U.S. States implementing Lean Government approaches in public environmen-
tal agencies.
U.S. Local Government

Some examples of municipalities where lean government practices have been imple-
mented include:
• City and County of Denver, Colorado
• City of Cape Coral, Florida
• City of Cincinnati, Ohio
• City of Ft. Wayne, Indiana
• City of Grand Rapids, Michigan
• City of Irving, Texas
• Jacksonville, Florida
The International City/County Management Association (ICMA) supports a program

to assist local government organizations to improve government processes using
Lean.
Lean Services
Lean services is the application of the lean manufacturing concept to service opera-
tions. It is distinct in that Lean services are not concerned with the making of ‘hard’
products.
To date, Lean principles of Continuous Improvement and Respect for People have

been applied to all manner of services including call center services, health care,
higher education, software development, and public and professional services.
Conceptually, these implementations follow very similar routes to those in man-
ufacturing settings, and often use some of the same tools and techniques. There
are, however, many significant distinctions and the same tools can be applied in
different ways.
Definition of “Service”
“Service” in this context is not limited to the office or administration, but also wider
service situations that are not necessarily repetitive, where task time is not applicable,
and where task times may be both long and variable. Service in this context could mean
anything from a hospital to a university, from an office process to a consultancy, and
from a warehouse to field service maintenance. “Service” refers to the service concept
WT
or product service bundle, which are all the activities that provide value to the customer
along a value stream.
Aspects of Lean Service

Lean Service has its origin in the Toyota Production System. Lean in the Service sector
is subject itself to continuous improvement, and as such there are an increasing num-
ber of concepts that may or may not be included as part of Lean Service.
The Service Wastes

The original seven wastes (muda) were defined by Taiichi Ohno, the father of the Toy-
ota Production System. These wastes have been often redefined to better fit new organ-
isations, industries, or external pressures.
One redefinition of these wastes for service operations by Bicheno and Holweg (2009)
is as follows:
• Delay on the part of customers waiting for service, for delivery, in queues, for
response, not arriving as promised. The customer’s time may seem free to the
provider, but when she takes custom elsewhere the pain begins.
• Duplication. Having to re-enter data, repeat details on forms, copy information
across, answer queries from several sources within the same organisation.
• Unnecessary Movement. Queuing several times, lack of one-stop, poor ergo-
nomics in the service encounter.
• Unclear communication, and the wastes of seeking clarification, confusion over
product or service use, wasting time finding a location that may result in misuse
or duplication.

• Incorrect inventory. Being out-of-stock, unable to get exactly what was re-
quired, substitute products or services.
• An opportunity lost to retain or win customers, a failure to establish rapport,

ignoring customers, unfriendliness, and rudeness.
• Errors in the service transaction, product defects in the product-service bun-

dle, lost or damaged goods.
• Service quality errors, lack of quality in service processes.
Value Demand and Failure Demand

One of the central concepts that distinguishes lean services from lean manufacturing is
the distinction between Value Demand and Failure Demand (Seddon, 2003).
WT
Value Demand is the demand for service from customers, while Failure Demand is the
demand caused by a failure to do something right for the customer. Failure demand
is thus demand that only exists because initial demand was not satisfied properly. For
example, a large proportion of calls that call centers receive are either chasing down
enquiries made earlier, or to correct earlier work that was not done properly. As one
of the key aims of “Lean” is to eliminate waste, Failure Demand represents an obvious
type of waste in service organizations.
Failure demand can also be defined as “the delivery or production of products and ser-
vices downstream as a result of defects in the system upstream.”(Shillingburg, 2011)
This would include administrative rework, audits, inspections and enquires. This non
value-added work can account for the majority of administrative work performed.
By treating failure and value demand alike in statistical analysis, failure demand can
give the quite false impression of greater productivity. This merely reinforces the need
to look at what is really going on, and ask why the service is being rendered.
Lean Six Sigma

In recent years, some major practitioners have combined Lean and Six Sigma princi-
ples to yield a methodology commonly known as Lean Six Sigma. One of the earliest
and most successful adopters of this is Honeywell, which calls its program Six Sigma
Plus. Like some other major practitioners, GE has developed a very rigorous Lean Six
Sigma training program in which certain employees are chosen to become certified in
this area.
Criticisms of Lean Service

More recently it is being argued that the application of lean manufacturing tools and
techniques have seriously damaged the service organizations that Lean has been ap-

plied to. John Seddon (visiting professor Sheffield University) has been especially vocal
and critical of lean in his paper ‘Rethinking Lean Service’.
The application of Lean Tools and techniques has led to serious problems in many ser-
vice organisations, including Her Majesty’s Revenue and Customs (HMRC) and even
Starbucks.
5S in the Office
5S has been widely and successfully applied in office environments, however this has
received some criticism for resulting in workplaces that are too clinical or impersonal.
Application of Lean in Creative Environments

Critics of Lean Service have suggested that problems arise when companies try to apply
WT
“Lean principles” to areas where creativity, ability to react to rapid external changes,
need to spend an extensive amount of time to convince external parties (typically lob-
bying) or ability to successfully negotiate are needed; and that the downsides of Lean
are reduced / eliminated creativity and ability to cope with the unexpected.
Proponents of Lean Service, however, suggest that these criticisms are a response to
Lean implementations that have failed to properly understand Lean as a holistic, action
based management and implementation system to provide enhanced customer value,
a “Tools” mentality instead of an outcomes orientation and an inadequate knowledge
of how to utilize and adapt Lean Manufacturing methods to the service environment.
Lean IT
Lean IT is the extension of lean manufacturing and lean services principles to the de-
velopment and management of information technology (IT) products and services. Its
central concern, applied in the context of IT, is the elimination of waste, where waste is
work that adds no value to a product or service.
Although lean principles are generally well established and have broad applicability,
their extension from manufacturing to IT is only just emerging. Lean IT poses signifi-
cant challenges for practitioners while raising the promise of no less significant bene-
fits. And whereas Lean IT initiatives can be limited in scope and deliver results quickly,
implementing Lean IT is a continuing and long-term process that may take years be-
fore lean principles become intrinsic to an organization’s culture.
Extension to IT
As lean manufacturing has become more widely implemented, the extension of lean

principles is beginning to spread to IT (and other service industries). Industry analysts

have identified many similarities or analogues between IT and manufacturing. For ex-
ample, whereas the manufacturing function manufactures goods of value to customers,
the IT function “manufactures” business services of value to the parent organization
and its customers. Similar to manufacturing, the development of business services en-
tails resource management, demand management, quality control, security issues, and
so on.
Moreover, the migration by businesses across virtually every industry sector towards
greater use of online or e-business services suggests a likely intensified interest in
Lean IT as the IT function becomes intrinsic to businesses’ primary activities of de-
livering value to their customers. Already, even today, IT’s role in business is sub-
stantial, often providing services that enable customers to discover, order, pay, and
receive support. IT also provides enhanced employee productivity through software
WT
and communications technologies and allows suppliers to collaborate, deliver, and
receive payment.
Consultants and evangelists for Lean IT identify an abundance of waste across the busi-
ness service “production line”, including legacy infrastructure and fractured processes.
By reducing waste through application of lean Enterprise IT Management (EITM) strat-
egies, CIOs and CTOs in companies such as Tesco, Fujitsu Services, and TransUnion
are driving IT from the confines of a back-office support function to a central role in
delivering customer value.
Types of Waste
Lean IT promises to identify and eradicate waste that otherwise contributes to poor
customer service, lost business, higher than necessary business costs, and lost employ-
ee productivity. To these ends, Lean IT targets eight elements within IT operations that
add no value to the finished product or service or to the parent organization.
Targets of waste in lean IT

Waste element Examples Business outcome
Defects • Unauthorized system and Poor customer service, increased
application changes. costs.
• Substandard project execu-

tion.
Overproduction • Unnecessary delivery of Business and IT misalignment, In-
(overprovisioning) low-value applications and creased costs and overheads: energy,
services. data center space, maintenance.
Waiting • Slow application response Lost revenue, poor customer service,
times. reduced productivity.
• Manual service escalation

procedures.

Non-Value Added • Reporting technology metrics Miscommunication.

Processing to business managers.
Transportation • On-site visits to resolve hard- Higher capital and operational ex-
ware and software issues. penses.
• Physical software, security and
compliance audits.
Inventory (excess) • Server sprawl, underutilized Increased costs: data center, energy;
hardware. lost productivity.
• Multiple repositories to handle
risks and control.
• Benched application develop-
ment teams.
Motion (excess) • Fire-fighting repeat problems Lost productivity.
within the IT infrastructure
WT
and applications.
Employee knowl- • Failing to capture ideas/inno- Talent leakage, low job satisfaction,
edge (unused) vation. increased support and maintenance
costs.
• Knowledge and experience
retention issues.
• Employees spend time on
repetitive or mundane tasks.
Whereas each element in the table can be a significant source of waste in itself, linkages
between elements sometimes create a cascade of waste (the so-called domino effect).
For example, a faulty load balancer (waste element: Defects) that increases web server
response time may cause a lengthy wait for users of a web application (waste element:
Waiting), resulting in excessive demand on the customer support call center (waste
element: Excess Motion) and, potentially, subsequent visits by account representatives
to key customers’ sites to quell concerns about the service availability (waste element:
Transportation). In the meantime, the company’s most likely responses to this problem
— for example, introducing additional server capacity and/or redundant load balanc-
ing software), and hiring extra customer support agents — may contribute yet more
waste elements (Overprovisioning and Excess Inventory).
Principles
Value Streams
In IT, value streams are the services provided by the IT function to the parent organi-
zation for use by customers, suppliers, employees, investors, regulators, the media, and
any other stakeholders. These services may be further differentiated into:
• Business services (primary value streams)
Examples: point-of-sale transaction processing, ecommerce, and supply chain optimi-

zation

• IT services (secondary value streams)
Examples: application performance management, data backup, and service catalog
The distinction between primary and secondary value streams is meaningful. Given
Lean IT’s objective of reducing waste, where waste is work that adds no value to a prod-
uct or service, IT services are secondary (i.e. subordinate or supportive) to business ser-
vices. In this way, IT services are tributaries that feed and nourish the primary business
service value streams. If an IT service is not contributing value to a business service, it
is a source of waste. Such waste is typically exposed by value-stream mapping.
Value-stream Mapping
Lean IT, like its lean manufacturing counterpart, involves a methodology of val-
ue-stream mapping — diagramming and analyzing services (value streams) into their
WT
component process steps and eliminating any steps (or even entire value streams) that
don’t deliver value.
Flow
Flow relates to one of the fundamental concepts of Lean as formulated within the Toyota
Production System — namely, mura. A Japanese word that translates as “unevenness,”
mura is eliminated through just-in-time systems that are tightly integrated. For example,
a server provisioning process may carry little or no inventory with labor and materials
flowing smoothly into and through the value stream.
A focus on mura reduction and flow may bring benefits that would be otherwise missed
by focus on muda (the Japanese word for waste) alone. The former necessitates a sys-
tem-wide approach whereas the latter may produce suboptimal results and unintended
consequences. For example, a software development team may produce code in a lan-
guage familiar to its members and which is optimal for the team (zero muda). But if
that language lacks an API standard by which business partners may access the code, a
focus on mura will expose this otherwise hidden source of waste.
Pull/Demand System
Pull (also known as demand) systems are themselves closely related to the aforemen-
tioned flow concept. They contrast with push or supply systems. In a pull system, a pull
is a service request. The initial request is from the customer or consumer of the product
or service. For example, a customer initiates an online purchase. That initial request
in turn triggers a subsequent request (for example, a query to a database to confirm
product availability), which in turn triggers additional requests (input of the custom-
er’s credit card information, credit verification, processing of the order by the accounts
department, issuance of a shipping request, replenishment through the supply-chain
management system, and so on).

Push systems differ markedly. Unlike the “bottom-up,” demand-driven, pull systems,
they are “top-down,” supply-driven systems whereby the supplier plans or estimates
demand. Push systems typically accumulate large inventory stockpiles in anticipation
of customer need. In IT, push systems often introduce waste through an over-abun-
dance of “just-in-case” inventory, incorrect product or service configuration, version
control problems, and incipient quality issues.
Implementation
Implementation begins with identification and description of one or more IT value streams.
For example, aided by use of interviews and questionnaires, the value stream for a primary
value stream such as a point-of-sale business service may be described as shown in Table.
Example: Description of a point-of-sale value stream
WT
Value metrics Demand pulls SLIs
“Owner” of EVP of • CAPEX • Budget reviews • Transaction
Business Store Oper- speed
Result ations • OPEX • Strategic reviews
• Labor efficiency • Service conti-
• Store redesign nuity
• Ease of use
• Store openings • Implementa-
• Check-out tion speed
speed
End Cus- Cashiers • Check-out • Transactions • Transaction
tomer speed speed
• Log ons
• Ease of use • Service conti-
nuity
End Cus- Shoppers • Payment types • Transactions • Transaction
tomer speed
• Check-out
speed
• Service conti-
• Ease of use nuity
Table suggests that the Executive Vice President (EVP) of Store Operations is ultimate-
ly responsible for the point-of-sale business service, and he/she assesses the value of
this service using metrics such as CAPEX, OPEX, and check-out speed. The demand
pulls or purposes for which the EVP may seek these metrics might be to conduct a
budget review or undertake a store redesign. Formal service-level agreements (SLAs)
for provision of the business service may monitor transaction speed, service continuity,
and implementation speed. The table further illustrates how other users of the point-
of-sale service — notably, cashiers and shoppers — may be concerned with other value
metrics, demand pulls, and SLAs.
Having identified and described a value stream, implementation usually proceeds with
construction of a value stream map — a pictorial representation of the flow of infor-
mation, beginning with an initial demand request or pull and progressing up the value

stream. Although value streams are not as readily visualizable as their counterparts in
lean manufacturing, where the flow of materials is more tangible, systems engineers
and IT consultants are practiced in the construction of schematics to represent infor-
mation flow through an IT service. To this end, they may use productivity software such
as Microsoft Visio and computer-aided design (CAD) tools. However, alternatives to
these off-the-shelf applications may be more efficient (and less wasteful) in the map-
ping process.
One alternative is use of a configuration management database (CMDB), which de-

scribes the authorized configuration of the significant components of an IT environ-
ment. Workload automation software, which helps IT organizations optimize real-time
performance of complex business workloads across diverse IT infrastructures, and oth-
er application dependency mapping tools can be an additional help in value stream
mapping.
WT
After mapping one or more value streams, engineers and consultants analyze the
stream(s) for sources of waste. The analysis may adapt and apply traditional efficiency
techniques such as time-and-motion studies as well as more recent lean techniques de-
veloped for the Toyota Production System and its derivatives. Among likely outcomes
are methods such as process redesign, the establishment of “load-balanced” work-
groups (for example, cross-training of software developers to work on diverse projects
according to changing business needs), and the development of performance manage-
ment “dashboards” to track project and business performance and highlight trouble
spots.
Trends
Recessionary Pressure to Reduce Costs
The onset of economic recession in December 2007 was marked by a decrease in individ-
uals’ willingness to pay for goods and services — especially in face of uncertainty about
their own economic futures. Meanwhile, tighter business and consumer credit, a steep
decline in the housing market, higher taxes, massive lay-offs, and diminished returns in
the money and bond markets have further limited demand for goods and services.
When an economy is strong, most business leaders focus on revenue growth. During
periods of weakness, when demand for good and services is curbed, the focus shifts to
cost-cutting. In-keeping with this tendency, recessions initially provoke aggressive (and
somes panic-ridden) actions such as deep discounting, fire sales of excess inventory,
wage freezes, short-time working, and abandonment of former supplier relationships
in favor of less costly supplies. Although such actions may be necessary and prudent,
their impact may be short-lived. Lean IT can expect to garner support during economic
downturns as business leaders seek initiatives that deliver more enduring value than is
achievable through reactive and generalized cost-cutting.

Proliferation of Online Transactions

IT has traditionally been a mere support function of business, in common with other
support functions such as shipping and accounting. More recently, however, compa-
nies have moved many mission-critical business functions to the Web. This migration
is likely to accelerate still further as companies seek to leverage investments in ser-
vice-oriented architectures, decrease costs, improve efficiency, and increase access to
customers, partners, and employees.
The prevalence of web-based transactions is driving a convergence of IT and business.

In other words, IT services are increasingly central to the mission of providing value
to customers. Lean IT initiatives are accordingly becoming less of a peripheral interest
and more of an interest that is intrinsic to the core business.
WT
Green IT
Though not born of the same motivations, lean IT initiatives are congruent with a broad
movement towards conservation and waste reduction, often characterized as green
policies and practices. green IT is one part of this broad movement.
Waste reduction directly correlates with reduced energy consumption and carbon gen-
eration. Indeed, IBM asserts that IT and energy costs can account for up to 60% of an
organization’s capital expenditures and 75% of operational expenditures. In this way,
identification and streamlining of IT value streams supports the measurement and im-
provement of carbon footprints and other green metrics. For instance, implementation
of Lean IT initiatives is likely to save energy through adoption of virtualization technol-
ogy and data center consolidation.
Challenges
Value-stream Visualization
Unlike lean manufacturing, from which the principles and methods of Lean IT derive,
Lean IT depends upon value streams that are digital and intangible rather than physical
and tangible. This renders difficult the visualization of IT value streams and hence the
application of Lean IT. Whereas practitioners of lean manufacturing can apply visual
management systems such as the kanban cards used in the Toyota Production System,
practitioners oflLean IT must use enterprise IT management tools to help visualize and
analyze the more abstract context of IT value streams.
Reference Implementations
As an emerging area in IT management, lean IT has relatively few reference imple-
mentations. Moreover, whereas much of the supporting theory and methodology is
grounded in the more established field of lean manufacturing, adaptation of such the-

ory and methodology to the digital service-oriented process of IT is likewise only just
beginning. This lack makes implementation challenging, as evidenced by the problems
experienced with the March 2008 opening of London Heathrow Airport’s Terminal 5.
British airports authority BAA and airline British Airways (BA), which has exclusive
use of the new terminal, used process methodologies adapted from the motor industry
to speed development and achieve cost savings in developing and integrating systems
at the new terminal. However, the opening was marred by baggage handling backlogs,
staff parking problems, and cancelled flights.
Resistance to Change
The conclusions or recommendations of Lean IT initiatives are likely to demand orga-
nizational, operational, and/or behavioral changes that may meet with resistance from
workers, managers, and even senior executives. Whether driven by a fear of job losses,
WT
a belief that existing work practices are superior, or some other concern, such changes
may encounter resistance. For example, a lean IT recommendation to introduce flex-
ible staffing whereby application development and maintenance managers share per-
sonnel is often met with resistance by individual managers who may have relied on
certain people for many years. Also, existing incentives and metrics may not align with
the proposed staff sharing.
Fragmented IT Departments
Even though business services and the ensuing flow of information may span multiple
departments, IT organizations are commonly structured in a series of operational or
technology-centric silos, each with its own management tools and methods to address
perhaps just one particular aspect of waste. Unfortunately, fragmented efforts at Lean
IT contribute little benefit because they lack the integration necessary to manage cu-
mulative waste across the value chain.
Integration of Lean Production and Lean Consumption

Related to the aforementioned issue of fragmented IT departments is the lack of inte-
gration across the entire supply chain, including not only all business partners but also
consumers. To this end, lean IT consultants have recently proposed so-called lean con-
sumption of products and services as a complement to lean production. In this regard,
the processes of provision and consumption are tightly integrated and streamlined to
minimize total cost and waste and to create new sources of value.
Deployment and Commercial Support

Deployment of lean IT has been predominantly limited to application development and
maintenance (ADM). This focus reflects the cost of ADM. Despite a trend towards in-
creased ADM outsourcing to lower-wage economies, the cost of developing and main-

taining applications can still consume more than half of the total IT budget. In this
light, the potential of Lean IT to increase productivity by as much as 40% while improv-
ing the quality and speed of execution makes ADM a primary target (the “low-hanging
fruit,” so to speak) within the IT department.
Opportunity to apply Lean IT exists in multiple other areas of IT besides ADM. For example,
service catalog management is a Lean IT approach to provisioning IT services. When, say,
a new employee joins a company, the employee’s manager can log into a web-based catalog
and select the services needed. This particular employee may need a CAD workstation as
well as standard office productivity software and limited access to the company’s extranet.
On submitting this request, provisioning of all hardware and software requirements would
then be automatic through a lean value stream. In another example, a Lean IT approach
to application performance monitoring would automatically detect performance issues at
the customer experience level as well as triage, notify support personnel, and collect data
WT
to assist in root-cause analysis. Research suggests that IT departments may achieve sizable
returns from investing in these and other areas of the IT function.
Among notable corporate examples of Lean IT adopters is UK-based grocer Tesco,

which has entered into strategic partnerships with many of its suppliers, including
Procter & Gamble, Unilever, and Coca-Cola, eventually succeeding in replacing week-
ly shipments with continuous deliveries throughout the day. By moving to eliminate
stock from either the back of the store or in high-bay storage, Tesco has gotten mark-
edly closer to a just-in-time pull system. Lean IT is also attracting public-sector in-
terest, in-keeping with the waste-reduction aims of the lean government movement.
One example is the City of Cape Coral, Florida, where several departments have de-
ployed lean IT. The city’s police records department, for instance, reviewed its pro-
cessing of some 20,000 traffic tickets written by police officers each year, halving the
time for an officer to write a ticket and saving $2 million. Comparable benefits have
been achieved in other departments such as public works, finance, fire, and parks and
recreation.
Complementary Methodologies
Although Lean IT typically entails particular principles and methods such as value
streams and value-stream mapping, Lean IT is, on a higher level, a philosophy rather
than a prescribed metric or process methodology. In this way, Lean IT is pragmatic
and agnostic. It seeks incremental waste reduction and value enhancement, but it does
not require a grand overhaul of an existing process, and is complementary rather than
alternative to other methodologies. Typically a grand overhaul is not recommended
because of the previously mentioned fragmentation issues. Companies that choose to
internally source their developers, reassigning them to software support functions can
run into many waste causing scenarios. For example, this can lead to highly skilled
employees effectively becoming customer support representatives. The employees pre-
vious salary requirements would still need to be met, potentially accumulating millions

of dollars in waste. A side effect may be overloading AD teams who need to handle the
same amount of development work. Also, since these employees are not usually cross
trained with business and/or other specialized IT areas there is a steep learning curve
and adjustment period. This can be a primary contributing factor to fragmentation.
This can lead to customer support issues actually taking longer to resolve and becoming
less efficient, due to constantly searching for or transferring issues to a support team’s
“expert” in a particular field. Another downside is employee resistance. For example,
an employee trained in Java programming who is now supporting customer issues will
likely start searching for another job in his/her field. Especially if they are no longer
being asked to use their perceived primary skill set.
Agile, Scrum and Lean Software Development

Agile Software Development is a set of software development methods that originated
WT
as a response for the indiscriminated use of CMMI, RUP and PMBOK creating fat and
slow software development processes that normally increased the lead time, the work
in progress and non-value added/value added activities ratio on projects. Agile soft-
ware development methods include XP, Scrum, FDD, AUP, DSDM, Crystal, and others.
Scrum is one of the more well known agile methods for project management, and has
as one of its origins concepts from Lean Thinking. Scrum also organizes work in a
cross-functional, multidisciplinary work cell. It uses some form of kanban system to
visualize and limit work in progress, and follows the PDCA cycle, and continuous im-
provements, that is the base of Lean.
Six Sigma
Whereas Lean IT focuses on customer satisfaction and reducing waste, Six Sigma fo-
cuses on removing the causes of defects (errors) and the variation (inconsistency) in
manufacturing and business processes using quality management and, especially, sta-
tistical methods. Six Sigma also differs from Lean methods by introducing a special
infrastructure of personnel (e.g. so-called “Green Belts” and “ Black Belts”) in the or-
ganization. Six Sigma is more oriented around two particular methods (DMAIC and
DMADV), whereas Lean IT employs a portfolio of tools and methods. These differences
notwithstanding, Lean IT may be readily combined with Six Sigma such that the latter
brings statistical rigor to measurement of the former’s outcomes.
Capability Maturity Model Integration (CMMI)

The Capability Maturity Model Integration (CMMI) from the Software Engineering In-
stitute of Carnegie Mellon University (Pittsburgh, Pennsylvania) is a process improve-
ment approach applicable to a single project, a division, or an entire organization. It
helps integrate traditionally separate organizational functions, set process improve-
ment goals and priorities, provide guidance for quality processes, and provide a bench-

mark or point of reference for assessing current processes. However, unlike Lean IT,
CMMI (and other process models) doesn’t directly address sources of waste such as a
lack of alignment between business units and the IT function or unnecessary architec-
tural complexity within a software application.
Information Technology Infrastructure Library (ITIL)

The Information Technology Infrastructure Library (ITIL) — a series of books pub-
lished by the United Kingdom’s Office of Government Commerce — contains concepts,
policies, and recommended practices on a broad range of IT management topics. These
are again entirely compatible with the objectives and methods of Lean IT. Indeed, as
another best-practice framework, ITIL may be considered alongside the CMMI for pro-
cess improvement and COBIT for IT governance.
WT
Universal Service Management Body of Knowledge (USMBOK)
The Universal Service Management Body of Knowledge (USMBOK) — is a single book pub-
lished by Service Management 101 and endorsed by numerous professional trade associa-
tions as the definitive reference for service management. The USMBOK contains a detailed
specification of a service system and organization and leverages the rich history of service
management as defined within product management and marketing professions. The
service organization specification describes seven key knowledge domains, equivalent to
roles, and forty knowledge areas, representing areas of practice and skills. Amongst these,
within the Service Value Management knowledge domain, are a number of Lean relevant
skills, including Lean Thinking and Value Mapping. The USMBOK also provides detailed
information on how problem management and lean thinking are combined with outside-in
(customer centric) thinking, in the design of a continuous improvement program.
COBIT
Control Objectives for Information and related Technology – better known as COBIT – is a
framework or set of best practices for IT management created by the Information Systems
Audit and Control Association (ISACA), and the IT Governance Institute (ITGI). It provides
managers, auditors, and IT users a set of metrics, processes, and best practices to assist in
maximizing the benefits derived through the use of IT, achieving compliance with regula-
tions such as Sarbanes-Oxley, and aligning IT investments with business objectives. COBIT
also aims to unify global IT standards, including ITIL, CMMI, and ISO 17799.
Lean CFP Driven

Lean CFP (Complex Flow Production) Driven is a new approach which takes into ac-
count not only the widely implemented Lean manufacturing, but combines the princi-

ples of Lean with the Operating Curve, an approach based on the theoretical approach
of Queuing Theory developed in academia in the 1970s. The goal of Lean CFP Driven is
to eliminate waste in order to achieve higher quality, increase productivity and at the
same time understand the relationship between utilization, lead time and variability in
order to maximize performance within the semiconductor industry.
Lean CFP Driven – Lean Complex Flow Production Driven

1. Background Semiconductor Industry
The semiconductor industry is one of the most productive and dynamic industries in
the world. It faces a continuous and rapid advancement in technology which puts the
companies under constant pressure to come up with superior and cheaper goods than
those that were state-of-the-art only a few months ago. The market and development of
WT
the market is based on Moore’s Law or More than Moore.
Customer demand in the semiconductor market evolves and changes at a swift pace
which leads to the fact that a high level of flexibility is necessary to serve and meet
the requirements of the customers. The semiconductor industry is furthermore very
capital intensive based on the fact that the production equipment is highly complex,
specialized and thus incredibly expensive. Challenges that the industry is facing are to
continuously improve yield performance, achieve the highest possible return on the
expensive equipment, speed and zero defects.
2. Lean CFP Driven and Traditional Lean

Lean CFP Driven moves in a new direction from the traditional Lean because of the
additional focus on utilization, cycle time and variability. The different characteristics
of the semiconductor industry, e.g. production structure and production related costs
compared to other industries, forms the need to approach the Lean philosophy in a new
way in order to meet these specific characteristics.
There are five key characteristics for the semiconductor industry:
• Long cycle time.
• No parallel process possible, high complexity
• Short product life cycle.
• Capital intensive production
• Drastic cost decrease over time
The complex production flow of a semiconductor fab is due to what is called a reen-
trance flow. A reentrant flow is a well-known attribute within a wafer fab and refers

to the wafer visiting each tool not only once, but maybe 20 times during the course
through the fab. To duplicate the expensive equipment and create a linear flow would
make it even more challenging to get the highest possible return on the equipment and
reach an optimized utilization of each tool, even though it results in a very complex
production.
The reentrant flow does require a certain level of flexibility, which in terms of Lean,
could be seen as muda (Waste). The necessary flexibility, also in order to meet fluctua-
tions in customer demand, requires the companies to apply other tools to measure and
forecast performance and this is what Lean CFP Driven provides to the Semiconductor
Industry. Lean CFP Driven adds the Operating Curve to evaluate the factors utilization,
cycle time and variability which cannot be done through implementation of Tradition-
al Lean.
WT
Typical tools within the Traditional Lean which are also included in the new approach
of Lean CFP Driven are as follows:
• Poka-Yoke
• Visual Management
• Value Stream Mapping
• Kanban
• JIT
• 5S
• 5 Whys
Operating Curve
What distinguishes Lean CFP Driven from the traditional approach of Lean in terms of
tools is that the new approach applies the tool Operating Curve in addition to the tools
listed above. An example of how the Operating Curve could look like is shown in the fig-
ure below. The optimal operating point is indicated for different variabilities describing

the non-uniformity of the production ( α ). The great advantage of adding the Operating
Curve tool is to maximize performance by optimizing both utilization and speed at the
same time for the complex industry of Semiconductors by reducing the variability via
the 4-partner method.
The Operating Curve is a tool initially developed in academia in the 1970s, based on the
Queuing Theory, which uses the indicators Cycle Time and Utilization to benchmark
and forecast a manufacturing line’s performance. The Operating Curve can be applied
for different reasons, for example:
- Understanding the relationship between variability, cycle time and utilization
- Quantify trade-off between cycle time and utilization
- Documenting a single factory’s performance over time
WT
- Calculate and Measure line performance
The Operating curve can be described by the following formula:
UU m
FF =
α +1
1 − UU m
where :
FF Flow Factor ranging from 0 - ∞
Variability describing the non-uniformity of the production (low α indicates good per-
α
formance). Alpha ranges from 0-1
UU m Utilization, ranging from 0-100%
The flow factor can also be described as:

CT
FF =
RPT
Where:
CT The line’s actual cycle time

The theoretical minimum amount of time that a lot (production unit) would need to move
RPT
from beginning to end (i.e. without queuing or process inefficiencies)
CT = WIP/GR
WIP Average Work in Process (including all products, also lots on hold)
RPT Maximum number of units to be processed each dayt
UUm = GR/CapaPU
CapaPU Capacity of the production unit

Lean Construction
Lean construction is a combination of operational research and practical development
in design and construction with an adaption of lean manufacturing principles and
practices to the end-to-end design and construction process. Unlike manufacturing,
construction is a project-based production process. Lean construction is concerned
with the alignment and holistic pursuit of concurrent and continuous improvements in
all dimensions of the built and natural environment: design, construction, activation,
maintenance, salvaging, and recycling (Abdelhamid 2007, Abdelhamid et al. 2008).
This approach tries to manage and improve construction processes with minimum cost
and maximum value by considering customer needs (Koskela et al. 2002).
The term lean construction was coined by the International Group for Lean Construc-
WT
tion in its first meeting in 1993 (Gleeson et al. 2007). Construction in Lean Construc-
tion refers to the entire industry and not the phase during which construction takes
place. Thus, Lean Construction is for owners, architects, designers, engineering, con-
structors, suppliers & end users.
Historical Development
Lauri Koskela, in 1992, challenged the construction management community to con-
sider the inadequacies of the time-cost-quality tradeoff paradigm. Another para-
digm-breaking anomaly was that observed by Ballard (1994), Ballard and Howell
(1994a and 1994b), and Howell (1998). Analysis of project plan failures indicated that
“normally only about 50% of the tasks on weekly work plans are completed by the end
of the plan week” and that constructors could mitigate most of the problems through
“active management of variability, starting with the structuring of the project (tem-
porary production system) and continuing through its operation and improvement,”
(Ballard and Howell 2003).
Evidence from research and observations indicated that the conceptual models of Con-
struction Management and the tools it utilizes (work breakdown structure, critical path
method, and earned value management) fail to deliver projects ‘on-time, at budget, and
at desired quality’ (Abdelhamid 2004). With recurring negative experiences on proj-
ects, evidenced by endemic quality problems and rising litigation, it became evident
that the governing principles of construction management needed revisiting. One com-
ment published by the CMAA, in its Sixth Annual Survey of Owners (2006), pointed to
concern about work methods and the cost of waste:
“While the cost of steel and cement are making headlines, the less publicized failures in
the management of construction projects can be disastrous. Listen carefully to the mes-
sage in this comment. We are not talking about just materials, methods, equipment,
or contract documents. We are talking about how we work to deliver successful capital
projects and how we manage the costs of inefficiency.”

A New Paradigm
Koskela (2000) argued that the mismatch between the conceptual models and observed
reality underscored the lack of robustness in the existing constructs and signaled the
need for a theory of production in construction. Koskela then used the ideal production
system embodied in the Toyota Production System to develop a more overarching pro-
duction management paradigm for project-based production systems where produc-
tion is conceptualized in three complementary ways, namely, as a Transformation (T),
as a Flow (F), and as Value generation (V).
Transformation is the production of inputs into outputs.
Flow can be defined as “Movement that is smooth and uninterrupted, as in the
‘flow of work from one crew to the next’ or the flow of value at the Pull of the
customer.”
WT
Value is “What the Customer is actually paying for the project to produce and
install.”
Koskela and Howell (2002) also presented a review of existing management theory
– specifically as related to the planning, execution, and control paradigms – in proj-
ect-based production systems. Both conceptualizations provide a solid intellectual
foundation of lean construction as evident from both research and practice (Abdelha-
mid 2004).
Recognizing that construction sites reflect prototypical behavior of complex and chaot-
ic systems, especially in the flow of both material and information on and off site, Ber-
telsen (2003a and 2003b) suggested that construction should be modeled using chaos
and complex systems theory. Bertelsen (2003b) specifically argued that construction
could and should be understood in three complimentary ways:
• As a project-based production process
• As an industry that provides autonomous agents
• As a social system
What is Lean Construction?

Lean construction is a “way to design production systems to minimize waste of ma-
terials, time, and effort in order to generate the maximum possible amount of value,”
(Koskela et al. 2002). Designing a production system to achieve the stated ends is only
possible through the collaboration of all project participants (Owner, A/E, contractors,
Facility Managers, End-user) at early stages of the project. This goes beyond the con-
tractual arrangement of design/build or constructability reviews where contractors,
and sometime facility managers, merely react to designs instead of informing and in-
fluencing the design (Abdelhamid et al. 2008).

Lean construction recognizes that desired ends affect the means to achieve these ends,
and that available means will affect realized ends (Lichtig 2004). Essentially, lean con-
struction aims to embody the benefits of the Master Builder concept (Abdelhamid et al.
2008).
“One can think of lean construction in a way similar to mesoeconomics. Lean construc-
tion draws upon the principles of project-level management and upon the principles
that govern production-level management. Lean construction recognizes that any suc-
cessful project undertaking will inevitably involve the interaction between project and
production management.” (Abdelhamid 2007).
Lean construction supplements traditional construction management approaches with

(Abdelhamid 2007): (1) two critical and necessary dimensions for successful capital
project delivery by requiring the deliberate consideration of material and information
WT
flow and value generation in a production system; and (2) different project and produc-
tion management (planning-execution-control) paradigms.
While lean construction is identical to lean production in spirit, it is different in how it

was conceived as well as how it is practiced. There is a view that “adaptation” of Lean
Manufacturing/Production forms the basis of Lean Construction. The view of Lauri
Koskela, Greg Howell, and Glenn Ballard is very different, with the origin of lean con-
struction arising mainly from the need for a production theory in construction and
anomalies that were observed in the reliability of weekly production planning.
Getting work to flow reliably and predictably on a construction site requires the impec-
cable alignment of the entire supply chain responsible for constructed facilities such that
value is maximized and waste is minimized. With such a broad scope, it is fair to say that
tools found in Lean Manufacturing and Lean Production, as practiced by Toyota and
others, have been adapted to be used in the fulfillment of Lean construction principles.
TQM, SPC, six-sigma, have all found their way into lean construction. Similarly, tools and
methods found in other areas, such as in social science and business, are used where they
are applicable. The tools and methods in construction management, such as CPM and
work breakdown structure, etc., are also utilized in lean construction implementations.
The three unique tools and methods that were specifically conceived for lean construction
are the Last Planner System, Target Value Design, and the Lean Project Delivery System.
If the tool, method, and/or technique will assist in fulfilling the aims of lean construc-
tion, it is considered a part of the toolkit available for use. A sampling of these tools
includes: BIM (Lean Design), A3, process design (Lean Design), offsite fabrication and
JIT (Lean Supply), value chain mapping (Lean Assembly), visual site (Lean Assembly);
5S (Lean Assembly), daily crew huddles (Lean Assembly).
The common spirit flows from shared principles:
• Whole System Optimisation through Collaboration and systematic learning

• continual improvement/pursuit of perfection involving everyone in the system
• a focus on delivering the value desired by the owner/client/end-user
• allowing value to flow by systematically eliminating obstacles to value creation

and those parts of the process that create no value
• creating pull production
The differences in detail flow from a recognition that construction is a project based
production where the product is generally a prototype.
The priority for all construction work is to:
1. Keep work flowing so that the crews are always productive installing product
WT
2. Reduce inventory of material and tools and
3. Reduce costs
While lean construction’s main tool for making design and construction processes
more predictable is the Last Planner System and derivatives of it, other lean tools al-
ready proven in manufacturing have been adapted to the construction industry with
equal success. These include: 5S, Kanban, Kaizen events, quick setup/changeover,
Poka Yoke, visual control and 5 Whys (Mastroianni and Abdelhamid 2003, Salem et
al. 2005).
Early Involvement of Contractors and Suppliers

The early involvement contractors and suppliers is seen as a key differentiator for con-
struction so called ‘best practice’. While there are Trade Marked business processes,
academics have also addressed related concepts such as ‘early contractor involvement’
(ECI).
Integrated Project Delivery

Integrated Project Delivery (IPD) is a registered business mark by Lean Construction
Institute with the USPTO. Primary IPD team members include the architect, key tech-
nical consultants, general contractor and key subcontractors.
Using IPD, project participants can overcome key organizational and contractual prob-
lems. The IPD approach to contracting aligns project objectives with the interests of
key participants. IPD relies on participant selection, transparency and continuing di-
alog. Construction consumers might consider rethinking their contracting strategies
to share more fully in the benefits. The IPD approach creates an organization with the
ability to apply Lean Project Delivery (LPD) principles and practices. (Matthews and
Howell 2005)

Commercial arrangements that support IPD and Lean Project

Delivery
There are at least five principal forms of contract that support lean construction
• In America, IFoA uses explicit lean construction principles. Sutter Health in

Sacramento developed ‘Integrated Form of Agreement for Lean Project Deliv-
ery’ for use on healthcare projects in and around California.
• ConsensusDocs300 is a derivative of IFoA. ConsensusDocs offers contracts

on Tri-Party Agreement for Integrated Project Delivery, Building Information
Modeling (BIM) Addendum, and Green Building Addendum projects.
• “AIA Document C191™–2009 is a standard form multi-party agreement

through which the owner, architect, contractor [etc] execute a single agreement
WT
for the design, construction and commissioning of a project.” The American In-
stitute of Architects (AIA) provides a list of Integrated Project Delivery system
distributors.
• In the UK, PPC2000 is publicized by the Association of Consultant Architects.
• In Australia, the Lean Construction Institute has collaborated with the Allianc-
ing Association of Australasia (AAA) around the topics of alliancing agreements
and collaborative contracts.
Other papers explain Integrated Project Delivery (IPD) and IFoA. PPC2000, IFoA and
‘alliancing agreements’ were among the topics discussed at the ‘Lean in the Public Sec-
tor’ (LIPS) conference held in 2009.
Integrated Lean Project Delivery (ILPD)

Integrated Lean Project Delivery (ILPD) is a process trademarked by The Boldt Group.
It was created and is practiced by The Boldt Group’s subsidiary, The Boldt Company.
The process aims to eliminate waste across the construction value chain, through eval-
uation of initial planning and design, and examination of construction processes to
predict where and when waste will occur, which is then eliminated through the use of
lean tools in the IPD process.
An ILPD contract is a multi-party agreement that specifies the use of lean practices
as conceived in the Lean Project Delivery System. This distinction is needed because
Integrated Project Delivery (IPD) is now only referring to the multi-party agreement
regardless of what practices are used, the so-called IPD-lite or IPD-ish.
Practical Applications of Lean Construction

In the UK, a major R&D project, Building Down Barriers, was launched in 1997 to

adapt the Toyota Production System for use in the construction sector. The resulting
supply chain management toolset was tested and refined on two pilot projects and the
comprehensive and detailed process-based toolset was published in 2000 as the ‘Build-
ing Down Barriers Handbook of Supply Chain Management-The Essentials’. The proj-
ect demonstrated very clearly that lean thinking would only deliver major performance
improvements if the construction sector learned from the extensive experience of other
business sectors. Lean thinking must become the way that all the firms in the design
and construction supply chain co-operate with each other at a strategic level that over-
arches individual projects. In the aerospace sector, these long-term supply-side rela-
tionships are called a ‘Virtual Company’, in other business sectors they are called an
‘Extended Lean Enterprise’.
The UK ‘Building Down Barriers Handbook of Supply Chain Management-The Es-

sentials’ states that: ‘The commercial core of supply chain management is setting
WT
up long-term relationships based on improving the value of what the supply chain
delivers, improving quality and reducing underlying costs through taking out waste
and inefficiency. This is the opposite of ‘business as usual’ in the construction sector,
where people do things on project after project in the same old inefficient ways, forc-
ing each other to give up profits and overhead recovery in order to deliver at what
seems the market price. What results is a fight over who keeps any of the meagre mar-
gins that result from each project, or attempts to recoup ‘negative margins’ through
‘claims’, The last thing that receives time or energy in this desperate, project-by-proj-
ect gladiatorial battle for survival is consideration of how to reduce underlying costs
or improve quality’.
Last Planner System

The Last Planner System, as developed by the Lean Construction Institute, is:
The collaborative, commitment-based planning system that integrates should-can-

will-did planning (pull planning, make-ready, look-ahead planning) with constraint
analysis, weekly work planning based upon reliable promises, and learning based upon
analysis of PPC (plan percent complete) and reasons for variance.
Users such as owners, clients or construction companies, can use LPS to achieve better
performance in design and construction through increased schedule/programme pre-
dictability (i.e. work is completed as and when promised).
LPS is a system of inter-related elements, and full benefits come when all are imple-
mented together. It is based on simple paper forms, so it can be administered using
Post-it notes, paper, pencil, eraser and photocopier. A spreadsheet can help.
LPS begins with collaborative scheduling/programming engaging the main project sup-
pliers from the start. Risk analysis ensures that float is built in where it will best protect
programme integrity and predictability. Where appropriate the process can be used for

programme compression too. In this way, one constructor took 6 weeks out of an 18-week
programme for the construction of a 40 bed hotel. Benefits to the client are enormous.
Intense discussion during a programme compression workshop
WT
Before work starts, team leaders make tasks ready so that when work should be done,
it can be. Why put work into production if a pre-requisite is missing? This MakeReady
process continues throughout the project.
Part of a MakeReady form for documenting the process of making tasks ready
(this one for use in design)
There is a weekly work planning (WWP) meeting involving all the last planners – de-
sign team leaders and/or trade supervisors on site. It is in everyone’s interest to explore
inter-dependencies between tasks and prevent colleagues from over-committing.
Part of a Weekly Work Plan form used by trade foremen on site or design
team leaders to prepare for the WWP meeting.
This weekly work planning processes is built around promises. The agreed programme
defines when tasks should be done and acts as a request to the supplier to do that task.
The last planners (that is the trade foremen on site or design team leaders in a design
process) only promise once they have clarified the conditions of satisfaction and are
clear that the task can be done.
Once the task is complete the last planner responsible declares completion so that site
management or the next trade can assure themselves that it is complete to an appro-
priate standard.

The promise cycle (after Fernando Flores)
A key measure of the success of the Last Planner system is PPC. This measures the
Percentage of Promises Completed on time. As PPC increases. project productivity and
WT
profitability increase, with step changes at around 70% and 85%. This score is mea-
sured site-wide and displayed around the site. Weekly measures are used by the project
and by individual suppliers as the basis for learning how to improve the predictability
of the work programme and hence the PPC scores.
A key part of the continual improvement process is a study of the reasons why tasks
promised in the WWP are delivered late. The following chart shows typical reasons:
Example of a reasons Pareto chart
Recording the reasons in a Pareto chart like the one above makes it easy to see where
attention is most likely to yield the most results. Using tools like 5 Why analysis and
cause-effect diagrams will help the team understand how they can improve the clarity
of information and ensure that there are sufficient operatives.
Last Planner benefits don’t stop at project predictability, profit and productivity; it con-
tributes to positive changes in other industry KPIs. Danish research shows almost half
the accidents and up to 70% less sickness absence on LPS managed sites.

LCI retains a registered Trademark on the term and Copyright in the idea and materi-
als to prevent people who misunderstand or misrepresent the system from using it in
trade. Consulting companies or individuals wishing to use the Last Planner System in
trade (commercial offering of service) must first be approved by LCI. Consultants are
expected to make financial and other contributions to LCI in recognition of the work
and effort LCI put into developing Last Planner.
Last Planner System development continues under the direction of Lean Construction
Institute Directors Professor Glenn Ballard and Greg Howell with support from users
around the world.
Differences between LC and Project Management Approaches

There are many differences between the Lean Construction (LC) approach and the
WT
Project Management Institute (PMI) approach to construction. These include:
• Managing the interaction between activities and combined effects of depen-

dence and variation, is a first concern in lean construction because their inter-
actions highly affects the time and cost of projects (Howell, 1999); in compari-
son, these interactions are not considered in PMI.
• In lean construction, optimization efforts focus on making work flow reliable

(Ballard, LPDS, 2000); in contrast PMI focuses on improving productivity
of each activity which can make errors and reducing quality and result in
rework.
• The project is structured and managed as a value generating process (value is

defined as satisfying customer requirements); while PMI considers less cost as
value.
• In the lean approach, downstream stakeholders are involved in front end plan-
ning and design through cross functional teams (Ballard, LPDS, 2000). PMI
doesn’t consider this issue.
• In lean construction, project control has the job of execution (Ballard, PhD the-
sis, 2000); whereas, control in PMI method relies on variance detection after-
the-fact.
• In the lean approach, pull techniques govern the flow of information and ma-
terials, from upstream to downstream; with PMI, push techniques govern the
release of information and materials.
• Capacity and inventory are adjusted to absorb variation (Mura). Feedback

loops, included at every level, help ensure minimal inventories and rapid sys-
tem response; in comparison, PMI doesn’t consider adjustments.

• Lean construction tries to mitigate variation in every aspect (product quality,

rate of work) and manage the remaining variation, while PMI doesn’t consider
variation mitigation and management.
• Lean approach tries to make continuous improvements in the process, work-

flows and product; whereas PMI approach doesn’t pay that much attention to
continuous improvement.
• In lean construction, decision making is distributed in design production con-

trol systems; by comparison, in PMI decision making is centered to one man-
ager some times.
• Lean construction tries to increase transparency between the stakeholders,

managers and labourers, in order to know the impact of their work on the whole
project; on the other hand, PMI doesn’t consider transparency in its methods.
WT
• In lean construction a buffer of sound assignments is maintained for each crew
or production unit; in contrast, PMI method doesn’t consider a backlog for
crews.
• Lean construction is developing new forms of commercial contracts to give

incentives to suppliers for reliable work flow and optimization at the deliver-
able-to-the-client level; while PMI doesn’t have such policy.
• Lean construction production system design resists the tendency toward local
suboptimization, however, PMI persists on optimizing each activity.
• The PMI-driven approach only considers managing a project at the macro-lev-

el. This is necessary but not sufficient for the success of projects. Lean Construc-
tion encompasses Project and Production Management, and formally recogniz-
es that any successful project undertaking will inevitably involve the interaction
between project and production management. (Abdelhamid et al. 2008)
LC Networks, Research and Teaching

Various networks and institutes conduct research and teach Lean Construction.
Networks, Journal and Conferences

• The Lean Construction Institute conducts research and industry outreach activ-
ities. There are national Lean Construction Institutes in Australia, Chile, Den-
mark, Finland, Germany, Norway, and the UK.
• Articles in the Lean Construction Journal are available for free, under a Cre-
ative Commons license, and go back to 2004. Readers are referred to the Lean
Construction Institute.

• The International Group for lean construction (IGLC), founded in 1993, has
Conference Papers available (1996-2016). The 2017 IGLC annual conference is
to be held in Crete, in July 2017.
• A list of groups in the global Lean Construction community is available via

dropbox.
University Research and Teaching

Various universities teach and conduct research on lean construction:
• The Project Production Systems Laboratory (P2SL) at the University of Califor-

nia, Berkeley deploys tools to manage project production systems.
• The Construction Industry Research (CIREC), at Michigan State University, in-
WT
vestigates and develops construction processes guided by Lean Construction
principles.
• Centro de Investigación en Ingeniería y Gerencia de la Construcción (IN2Ge-

Co), Los Andes University, Colombia
• The Centre for Lean Projects, Nottingham Trent University
• Universities active in LC research and teaching:
o US: Illinois Institute of Technology; U.C. Berkeley; Michigan State Uni-

versity; San Diego State University; Texas A & M; Washington State Uni-
versity; Virginia Tech; Arizona State University; Purdue University; Bowl-
ing Green University; North Carolina State University; University of Texas
– Austin; University of Colorado – Boulder; University of Wisconsin –
Madison.
o UK: University of Huddersfield; Nottingham Trent University; University

of Edinburgh, Heriot-Watt University, University of Manchester, Salford
University.
o Chile: Centro de Excelencia en Gestion de Produccion GEPUC - Pontificia

Universidad Catolica de Chile GEPUC Chile.
o Spain: Universidad Politecnica de Valencia.IGLC2014
o Colombia: University of Los Andes, Research Group of Engineering and

Construction Management (IN2gego) SeIN2Co Lean Project Management
y Lean Construction.
o Israel: Technion Israel Institute of Technology.
o India: Indian Institute of Technology Madras.

Global Initiative
• In 2009 Alan Mossman proposed a global Masters by action research to be de-
livered by collaborating universities. The Lean Construction Light House has
sample course materials.
History of Firsts
• In 2002, the ‘Lean Construction Principles and Methods’ program CMP831 was
first delivered by Tariq Abdelhamid, at Michigan State University. It was the
first full-graduate program in ‘lean construction’ as a named course.
• In 2000, PhDs in lean construction were awarded to:

1. Dr. Glenn Ballard (UK)
WT
2. Dr. Lauri Koskela (Finland)
• Around 1997, the University of California, Berkeley, became the first university
to offer lean construction modules within its existing graduate offering.
Lean Laboratory
A lean laboratory is one which is focused on testing products and materials to deliver
results in the most efficient way in terms of cost or speed or both. Lean laboratory is
a management and organization process derived from Lean Manufacturing and the
Toyota Production System (TPS). The goal of a Lean laboratory is to use less effort,
fewer resources, and less time to test incoming samples. Lean laboratory programs are
generally associated with Food, Beverage, Life Science and Pharmaceutical companies.
Overview
Healthcare companies operate in highly regulated manufacturing environments which
often necessitate a great deal of resources, time and money, being expended in the
testing, release and Quality Assurance of their products. In recent years there has been
a drive to adopt a more Lean approach both in the manufacturing and testing of prod-
ucts. The advances in Lean thinking developed and refined in the automotive industry
initially by Toyota (TPS), are now being used as best practices across all manufacturing
sectors. Lean Laboratory shares its origins with Lean Manufacturing and utilises the
same tools to deliver the most efficient and least wasteful process. Tools such as Kaizen,
Just In Time (JIT), Heijunka and Six Sigma.
The principles of lean manufacturing have been slow to migrate to laboratories because
they are quite different from manufacturing environments. While most of the key prin-

ciples of traditional Lean still apply, there are many unique challenges involved in ef-
fectively implementing them in laboratories. Compared to manufacturing environments
most analytical and microbiological laboratories have a relatively low volume of samples
but a high degree of variability and complexity. Many standard lean tools are not a good
fit, however Lean can be applied to labs. A generic approach is not suitable for laborato-
ries but careful adaptation of the techniques based on a thorough understanding of Lab
operations will deliver significant benefits in terms of cost or speed or both.
Conventional Laboratories
It is a common occurrence for testing laboratories to suffer from long and variable lead
times. Some of the problems or issues which can be attributed to conventional or “non
lean” laboratories are:
WT
Lack of Focus
Analysts and Microbiologists are typically focused on test accuracy and individual test
run efficiency. Very often, personnel are dedicated to specific tests and there is little or
no control of the progress of individual samples through a sometimes highly variable
test routing that can be dependent on product type and/or the intended market.
Long and Variable Lead Times

In many test laboratories, it is normal to find queues in front of each test where individ-
ual samples wait until enough similar samples arrive to constitute an ‘efficient test run’.
This approach causes long and variable lead times and, contrary to popular belief, does
not result in higher productivity.
Ineffective ‘Fast Track’ Systems

To deal with the long lead times, ‘Fast Track’ systems are often developed in an effort
to deal with urgent samples but these often become unworkable. Frequently, the pro-
portion of samples designated as priority becomes so large that ‘fast tracking’ quickly
becomes ineffective.
High Levels of WIP

Laboratories often maintain high levels of work in process (WIP) which inevitably re-
sults in lots of (non value adding) effort being expended in controlling, tracking and
prioritizing samples and in planning analyst work. Companies often respond to this
situation by investing in a “Laboratory Information Management System” (LIMS) or
some other IT system. However these systems do not in themselves improve perfor-
mance. The underlying process by which work is organized and moves through the lab
must first be re-engineered based on lean principles.

Volatile Incoming Workload

For many testing laboratories the incoming workload is inherently volatile with signif-
icant peaks and dips. This causes low productivity (during dips) and/or poor lead time
performance (during peaks). Very often the capacity of the lab is not well understood
and there is no mechanism to level or smooth the workload.
Implementing Lean in the Lab

To address the above problems and issues a Lean Laboratory uses Lean principles to
eliminate waste or Muda (Japanese term). There are a number of principles that can be
used but the goal is always primarily focused on improving measurable performance
and/or reducing costs. The following key principles always apply:
WT
Specify Value
The first step in designing any Lean laboratory is to specify value. Every activity in
the laboratory is identified and categorizing as ‘value add’, ‘non value add’ (from the
customers perspective) and ‘incidental’. Incidental work is non value add in itself but
essential to enable ‘value add’ tasks to be carried out. A significant focus of any Lean
Lab initiative will be to eliminate or reduce the non value add activities.
Identify the Value Stream

Another key Lean step is to develop value stream maps of the overall release pro-
cess. This should avoid the error of working on point solutions that only end up
moving a bottleneck to another process and therefore do not deliver overall im-
provements. For example, there is no real value in reducing analytical laboratory
lead times below the time of a release constraint test in the Microbiology lab. You
can however use increased velocity to help ‘level the load’ or to maximize individual
test run efficiency.
Make Value Flow and Create Pull

A Lean laboratory will normally have a defined sequence of tests and associated ana-
lyst roles that make good use of people and equipment. A key principle is to flow work
through the laboratory so that once testing begins on a sample, it is kept moving and
not allowed to queue between tests. This creates a focus and drive to reduce ‘through-
put’ time which can be converted into a lead-time reduction or used to allow samples
to wait in an incoming queue to facilitate level loading and /or grouping for efficiency.
‘Pull’ is interpreted as testing according to customer priority. If this is not inherent in

the order in which samples arrive, then the samples are taken from an incoming queue
according to customer demand and thereafter processed in FIFO order with no over-
taking.

Level the Load and the Mix (Heijunka)

At its simplest, leveling the load (overall workload) and the mix (the mix of sample
types) is about putting the same amount of work into the lab on a daily basis. This
is probably the most critical step and potentially the most beneficial for the majority
of testing Laboratories. Successfully leveling a volatile load and mix will significantly
improve productivity and/or lead time. The productivity improvement can be used to
provide additional capacity or converted into a cost reduction.
Eliminate Waste (Muda)

Lean laboratories continuously look to develop solutions and re-engineer processes to elim-
inate or reduce the non value add and incidental tasks identified when ‘specifying value’.
WT
Manage Performance
An essential part of Lean in the Laboratory is to manage and review labs performance
daily, ensuring that Key Performance Indicators (KPI’s) are good and that the overall
laboratory process is ‘in control’.
Lean Product Development

Lean product development (LPD) is a lean approach to meet the challenges of product
development, notably:
• Need for more innovative solutions
• Reducing long development cycle times
• Many redevelopment cycles
• Reducing high development costs
• Reducing long production cycle times
• Reducing high production costs
Lean Software Development

Lean software development (LSD) is a translation of lean manufacturing and lean IT
principles and practices to the software development domain. Adapted from the Toyota
Production System, a pro-lean subculture is emerging from within the Agile community.

The term lean software development originated in a book by the same name, written
by Mary Poppendieck and Tom Poppendieck. The book restates traditional lean princi-
ples, as well as a set of 22 tools and compares the tools to corresponding agile practices.
The Poppendiecks’ involvement in the Agile software development community, includ-
ing talks at several Agile conferences has resulted in such concepts being more widely
accepted within the Agile community.
Lean Principles
Lean development can be summarized by seven principles, very close in concept to lean
manufacturing principles:
1. Eliminate waste
2. Amplify learning
WT
3. Decide as late as possible
4. Deliver as fast as possible
5. Empower the team
6. Build integrity in
7. See the whole
Eliminate Waste
Lean philosophy regards everything not adding value to the customer as waste (muda).
Such waste may include:
1. Partially done work
2. Extra processes
3. Extra features
4. Task switching
5. Waiting
6. Motion
7. Defects
8. Management activities
Industry research revealed these software development wastes:
1. Building the wrong feature or product

2. Mismanaging the backlog
3. Rework
4. Unnecessarily complex solutions
5. Extraneous cognitive load
6. Psychological distress
7. Waiting/multitasking
8. Knowledge loss
9. Ineffective communication.
WT
In order to eliminate waste, one should be able to recognize it. If some activity could
be bypassed or the result could be achieved without it, it is waste. Partially done cod-
ing eventually abandoned during the development process is waste. Extra processes
like paperwork and features not often used by customers are waste. Switching people
between tasks is waste. Waiting for other activities, teams, processes is waste. Motion
required to complete work is waste. Defects and lower quality are waste. Managerial
overhead not producing real value is waste.
A value stream mapping technique is used to identify waste. The second step is to point
out sources of waste and to eliminate them. Waste-removal should take place iterative-
ly until even seemingly essential processes and procedures are liquidated.
Amplify Learning
Software development is a continuous learning process based on iterations when writ-
ing code. Software design is a problem solving process involving the developers writing
the code and what they have learned. Software value is measured in fitness for use and
not in conformance to requirements.
Instead of adding more documentation or detailed planning, different ideas could be

tried by writing code and building. The process of user requirements gathering could
be simplified by presenting screens to the end-users and getting their input. The accu-
mulation of defects should be prevented by running tests as soon as the code is written.
The learning process is sped up by usage of short iteration cycles – each one coupled
with refactoring and integration testing. Increasing feedback via short feedback ses-
sions with customers helps when determining the current phase of development and
adjusting efforts for future improvements. During those short sessions both custom-
er representatives and the development team learn more about the domain problem
and figure out possible solutions for further development. Thus the customers better
understand their needs, based on the existing result of development efforts, and the

developers learn how to better satisfy those needs. Another idea in the communication
and learning process with a customer is set-based development – this concentrates on
communicating the constraints of the future solution and not the possible solutions,
thus promoting the birth of the solution via dialogue with the customer.
Decide as Late as Possible

As software development is always associated with some uncertainty, better results
should be achieved with an options-based approach, delaying decisions as much as
possible until they can be made based on facts and not on uncertain assumptions and
predictions. The more complex a system is, the more capacity for change should be
built into it, thus enabling the delay of important and crucial commitments. The iter-
ative approach promotes this principle – the ability to adapt to changes and correct
mistakes, which might be very costly if discovered after the release of the system.
WT
An agile software development approach can move the building of options earlier for
customers, thus delaying certain crucial decisions until customers have realized their
needs better. This also allows later adaptation to changes and the prevention of costly
earlier technology-bounded decisions. This does not mean that no planning should be
involved – on the contrary, planning activities should be concentrated on the different
options and adapting to the current situation, as well as clarifying confusing situations
by establishing patterns for rapid action. Evaluating different options is effective as
soon as it is realized that they are not free, but provide the needed flexibility for late
decision making.
Deliver as Fast as Possible

In the era of rapid technology evolution, it is not the biggest that survives, but the fast-
est. The sooner the end product is delivered without major defects, the sooner feedback
can be received, and incorporated into the next iteration. The shorter the iterations, the
better the learning and communication within the team. With speed, decisions can be
delayed. Speed assures the fulfilling of the customer’s present needs and not what they
required yesterday. This gives them the opportunity to delay making up their minds
about what they really require until they gain better knowledge. Customers value rapid
delivery of a quality product.
The just-in-time production ideology could be applied to software development, rec-

ognizing its specific requirements and environment. This is achieved by presenting the
needed result and letting the team organize itself and divide the tasks for accomplishing
the needed result for a specific iteration. At the beginning, the customer provides the
needed input. This could be simply presented in small cards or stories – the developers
estimate the time needed for the implementation of each card. Thus the work organiza-
tion changes into self-pulling system – each morning during a stand-up meeting, each
member of the team reviews what has been done yesterday, what is to be done today

and tomorrow, and prompts for any inputs needed from colleagues or the customer.
This requires transparency of the process, which is also beneficial for team communica-
tion. Another key idea in Toyota’s Product Development System is set-based design. If
a new brake system is needed for a car, for example, three teams may design solutions
to the same problem. Each team learns about the problem space and designs a poten-
tial solution. As a solution is deemed unreasonable, it is cut. At the end of a period, the
surviving designs are compared and one is chosen, perhaps with some modifications
based on learning from the others - a great example of deferring commitment until the
last possible moment. Software decisions could also benefit from this practice to mini-
mize the risk brought on by big up-front design.
Empower the Team

There has been a traditional belief in most businesses about the decision-making in the
WT
organization – the managers tell the workers how to do their own job. In a “Work-Out
technique”, the roles are turned – the managers are taught how to listen to the devel-
opers, so they can explain better what actions might be taken, as well as provide sug-
gestions for improvements. The lean approach follows the Agile Principle “find good
people and let them do their own job,” encouraging progress, catching errors, and re-
moving impediments, but not micro-managing.
Another mistaken belief has been the consideration of people as resources. People might
be resources from the point of view of a statistical data sheet, but in software development,
as well as any organizational business, people do need something more than just the list of
tasks and the assurance that they will not be disturbed during the completion of the tasks.
People need motivation and a higher purpose to work for – purpose within the reachable
reality, with the assurance that the team might choose its own commitments. The devel-
opers should be given access to the customer; the team leader should provide support and
help in difficult situations, as well as ensure that skepticism does not ruin the team’s spirit.
Build Integrity in
The customer needs to have an overall experience of the System. This is the so-called
perceived integrity: how it is being advertised, delivered, deployed, accessed, how intu-
itive its use is, its price and how well it solves problems.
Conceptual integrity means that the system’s separate components work well together
as a whole with balance between flexibility, maintainability, efficiency, and responsive-
ness. This could be achieved by understanding the problem domain and solving it at the
same time, not sequentially. The needed information is received in small batch pieces
– not in one vast chunk - preferably by face-to-face communication and not any written
documentation. The information flow should be constant in both directions – from cus-
tomer to developers and back, thus avoiding the large stressful amount of information
after long development in isolation.

One of the healthy ways towards integral architecture is refactoring. As more features
are added to the original code base, the harder it becomes to add further improve-
ments. Refactoring is about keeping simplicity, clarity, minimum number of features in
the code. Repetitions in the code are signs of bad code designs and should be avoided.
The complete and automated building process should be accompanied by a complete
and automated suite of developer and customer tests, having the same versioning, syn-
chronization and semantics as the current state of the System. At the end the integrity
should be verified with thorough testing, thus ensuring the System does what the cus-
tomer expects it to. Automated tests are also considered part of the production process,
and therefore if they do not add value they should be considered waste. Automated
testing should not be a goal, but rather a means to an end, specifically the reduction of
defects.
See the Whole
WT
Software systems nowadays are not simply the sum of their parts, but also the product
of their interactions. Defects in software tend to accumulate during the development
process – by decomposing the big tasks into smaller tasks, and by standardizing differ-
ent stages of development, the root causes of defects should be found and eliminated.
The larger the system, the more organizations that are involved in its development and
the more parts are developed by different teams, the greater the importance of having
well defined relationships between different vendors, in order to produce a system with
smoothly interacting components. During a longer period of development, a stronger
subcontractor network is far more beneficial than short-term profit optimizing, which
does not enable win-win relationships.
Lean thinking has to be understood well by all members of a project, before imple-
menting in a concrete, real-life situation. “Think big, act small, fail fast; learn rapidly”
– these slogans summarize the importance of understanding the field and the suit-
ability of implementing lean principles along the whole software development process.
Only when all of the lean principles are implemented together, combined with strong
“common sense” with respect to the working environment, is there a basis for success
in software development.
Lean Software Practices

Lean software development practices, or what the Poppendiecks call “tools” are restat-
ed slightly from the original equivalents in Agile software development. Examples of
such practices include:
• Seeing waste
• Value stream mapping
• Set-based development

• Pull systems
• Queuing theory
• Motivation
• Measurements
• TDD
Since Agile Software Development is an umbrella term for a set of methods and practic-
es based on the values and principles expressed in the Agile Manifesto, Lean Software
Development is considered an Agile Software Development Method.
WT
The Visual Workplace
The visual workplace is a continuous improvement paradigm that is closely related to
Lean, the Toyota Production System (TPS), and operational excellence yet offers its
own comprehensive methodology for significant financial and cultural improvement
gains. Introduced by Gwendolyn Galsworth in her 1997 book Visual Systems,., this sys-
tem integrates and codifies the many iterations of visuality in the world of continuous
improvement.
Brief History of Visual Information Sharing

Visual communication rests on the natural inclination of humans to use pictures,
graphics, and other images to quickly and simply convey meaning and understand in-
formation. For instance, look at the practices and applications that civil engineers have
developed to handle complex human interaction on our roads and highways, as well as
the entire field of wayfinding in public spaces.
The same logic eventually migrated into the workplace, notably in post-war Japan, and
most saliently at Toyoda Motors where visual applications (visual devices) became a
commonplace element in the Toyota Production System (TPS). Other leading compa-
nies in Japan, such as Canon and Okidata, adopted many of the same practices. Howev-
er, while visibility was clearly a part of Japan’s success solution, it was only noticed—or
cited in the literature—as a generalized principle and not a codified system or a frame-
work of thinking. For example, Dr. Robert W. Hall, in his 1983 book, Zero Inventories,
states: “Establishing visibility of all forms of production problems is very important.
...The entire idea is instant communication.”
Specifically, Japan’s JIT (just-in-time) manufacturing approach had an easy-to-under-

stand visual interface: andon (stacked lights) kanban (pick-up tickets for control ma-

terial quantity), color-coding (to make the match between items), scheduling boards
for daily production, easy-to-read labels on shelving, and lines on the floor to trace out
locations.
Japanese master practitioners also noted that visual devices made it easy to see the
difference between normal and abnormal: “…abnormal conditions and problems need
to be obvious enough to catch people’s attention. Because of the emphasis on visual
methods for quick information transfer, the practice is called ’management by sight’ or
‘visual control’.” Suzaki also compared the responsiveness of a well-tuned production
system with the way the human body responds to stimuli and problems: “…Corrective
action is taken right away, just as our muscles pull our hand away when we touch a hot
plate.”
Michel Greif’s book, The Visual Factory conferred the name for the first time, though
WT
Dr. Greif’s theme focused primarily on the ability of visual applications to increase the
interest of hourly workers in their own performance and their participation in company
improvement activities.
A Codified System of Visual Functions

Throughout this period (1983–1991), Gwendolyn Galsworth was head of training and
development at Productivity Inc. in Cambridge, Massachusetts, a publishing, training,
and consulting firm known for bringing the work of Japan’s manufacturing leaders to
the United StatesGalsworth headed study missions to Japan and observed visuality in
Japan first-hand. She also had the opportunity of working one-on-one with many of Ja-
pan’s seminal thinkers, including Taiichi Ohno, Ryuji Fukuda, and Shigeo Shingo. Dr.
Shingo personally tasked Galsworth with developing his mistake proofing/poka-yoke
methodology for western companies. It was the synthesis of all these factors and influ-
ences that lead Dr. Galsworth to develop and codify the many threads of visuality into
a coherent methodology of the visual workplace.
The visual workplace, then, is an overall operational strategy and philosophy, geared to
help organizations continually achieve their goals through visual devices and systems.
Galsworth continues to be the main driving force behind the practice and articulation of
workplace visuality, along with a network of individuals and companies loosely coupled as
visual workplace practitioners around the world. The visual workplace is a large body of
knowledge and know-how, with a strong guiding philosophy of continuous improvement
with an emphasis on the centrality of the individual in the prosperity of the enterprise.
Basic Principles
While virtually all major improvement paradigms in use in the West incorporate some
element of visuality, the entire codified set of visual principles and practices, from the
foundation of 5S through to visual guarantees (poka-yoke), rests on this definition:

“The visual workplace is a self-ordering, self-explaining, self-regulating, and self-im-

proving work environment—where what is supposed to happen does happen, on time,
every time, day or night—because of visual devices.”
A visual workplace is defined by devices designed to visually share information about

organizational operations in order to make human and machine performance safer,
more exact, more repeatable, and more reliable. The more the process becomes visual,
the more production velocity increases.
This is accomplished in parallel with generating new levels of employee engagement

and contribution, which in turn lead to improved alignment within the enterprise and
significant bottom line benefits. In an effective visual workplace, this level of infor-
mation can be seen and understood without coaching, supervision or the need for an
explanation—at best, without speaking a word.
WT
The key principle is to install vital information visually as close to the point of use as
possible. When a step-by-step methodology is applied, the visual workplace targets the
elimination of the seventh waste, motion, defined as moving without working.
Originally implemented and refined in manufacturing settings, the concept of the

visual workplace is now taking hold in such wide-ranging venues as libraries and
hospitals.
Autonomation
Autonomation describes a feature of machine design to effect the principle of jidoka
used in the Toyota Production System (TPS) and Lean manufacturing. It may be de-
scribed as “intelligent automation” or “automation with a human touch.” This type of
automation implements some supervisory functions rather than production functions.
At Toyota this usually means that if an abnormal situation arises the machine stops and
the worker will stop the production line. It is a quality control process that applies the
following four principles:
1. Detect the abnormality.
2. Stop.
3. Fix or correct the immediate condition.
4. Investigate the root cause and install a countermeasure.
Autonomation aims to prevent the production of defective products, eliminate over-

production and focus attention on understanding the problems and ensuring that they
do not reoccur.

Purpose and Implementation

Autonomation is called by Shigeo Shingo pre-automation. It separates workers from
machines through mechanisms that detect production abnormalities (many machines
in Toyota have these). He says there are twenty-three stages between purely manual
and fully automated work. To be fully automated machines must be able to detect and
correct their own operating problems which is currently not cost-effective. However,
ninety percent of the benefits of full automation can be gained by autonomation.
The purpose of autonomation is that it makes possible the rapid or immediate address,
identification and correction of mistakes that occur in a process. Autonomation relieves
the worker of the need to continuously judge whether the operation of the machine is
normal; their efforts are now only engaged when there is a problem alerted by the ma-
chine. As well as making the work more interesting this is a necessary step if the worker
WT
is to be asked later to supervise several machines. The first example of this at Toyo-
ta was the auto-activated loom of Sakichi Toyoda that automatically and immediately
stopped the loom if the vertical or lateral threads broke or ran out.
For instance rather than waiting until the end of a production line to inspect a finished
product, autonomation may be employed at early steps in the process to reduce the
amount of work that is added to a defective product. A worker who is self-inspecting
their own work, or source-inspecting the work produced immediately before their work
station is encouraged to stop the line when a defect is found. This detection is the first
step in Jidoka. A machine performing the same defect detection process is engaged in
autonomation.
Once the line is stopped a supervisor or person designated to help correct problems
gives immediate attention to the problem the worker or machine has discovered. To
complete Jidoka, not only is the defect corrected in the product where discovered, but
the process is evaluated and changed to remove the possibility of making the same mis-
take again. One solution to the problems can be to insert a “mistake-proofing” device
somewhere in the production line. Such a device is known as poka-yoke.
Relationship with Just-in-Time

Taiichi Ohno and Sakichi Toyoda, originators of the TPS and practices in the manufac-
turing of textiles, machinery and automobiles considered JIT & Autonomation the pillars
upon which TPS is built. Jeffrey Liker and David Meier indicate that Jidoka or “the de-
cision to stop and fix problems as they occur rather than pushing them down the line to
be resolved later” is a large part of the difference between the effectiveness of Toyota and
other companies who have tried to adopt Lean Manufacturing. Autonomation, therefore
can be said to be a key element in successful Lean Manufacturing implementations.
For Just-in-Time (JIT) systems, it is absolutely vital to produce with zero defects, or
else these defects can disrupt the production process - or the orderly flow of work.

JIT and Lean Manufacturing are always searching for targets for continuous improve-
ment in its quest for quality improvements, finding and eliminating the causes of prob-
lems so they do not continually crop up.
Jidoka involves the automatic detection of errors or defects during production. When
a defect is detected the halting of the production forces immediate attention to the
problem.
The halting causes slowed production but it is believed that this helps to detect a prob-
lem earlier and avoids the spread of bad practices. (JBLL, Jun18, 2006).
Etymology
The word “autonomation” a loan word from the Sino-Japanese vocabulary, is a port-
manteau of “autonomous” and “automation”which is written using three kanji charac-
WT
ters: “self”, “movement”, and “-ization”. In the Toyota Production System, the second
character is replaced with “work”, which is a character derived by adding a radical rep-
resenting “human” to the original.
References
• Stüer, Philipp (2015), Gestaltung industrieller Dienstleistungen nach Lean-Prinzipien (Design
of Industrial Services according to Lean Principles), Apprimus Verlag. ISBN 978-3-86359-298-1
• Bailey, David (24 January 2008). “Automotive News calls Toyota world No 1 car maker”. Reuters.
com. Reuters. Retrieved 19 April 2008
• Ker, J. I., Wang, Y., Hajli, M. N., Song, J., & Ker, C. W. (2014). Deploying lean in healthcare: Eval-
uating information technology effectiveness in US hospital pharmacies. International Journal of
Information Management, 34(4), 556-560
• Hobbs, Dennis P. (2003), Lean Manufacturing Implementation: A Complete Execution Manual

for Any Size Manufacturer, ISBN 1-932159-14-2
• Holweg, Matthias (2007). “The genealogy of lean production”. Journal of Operations Manage-
ment. 25 (2): 420–437. doi:10.1016/j.jom.2006.04.001
• Adsit, Dennis. “Cutting Edge Methods Target Real Call Center Waste”. isixsigma.com. Archived
from the original on 2008-04-14. Retrieved 19 April 2008
• Bell, Steve and Orzen, Mike (2010) Lean IT, Enabling and Sustaining Your Lean Transformation,
Productivity Press, ISBN 978-1-4398-1757-5. Shingo Prize Research Award 2011
• Pettersen, J., 2009. Defining lean production: some conceptual and practical issues. The TQM
Journal, 21(2), 127 - 142
• Merrill Douglas (June 2013). “The Lean Supply Chain: Watch Your Waste Line”. inboundlogis-
tics. Retrieved 22 February 2017
• Nash-Hoff, Michele. “Why Lean Manufacturers Are Not Lean Enterprises”. Industryweek.com.
Industryweek.com. Retrieved 1 May 2015
• Sato, Masaaki (December 16, 2008). The Toyota Leaders: An Executive Guide (1st ed.). Vertical.
pp. 40–45. ISBN 978-1934287231

• Ballard, Glenn (22–24 April 1994). “The Last Planner” (pdf). Northern California Construction
Institute Spring Conference. Monterey, CA: Lean Construction Institute. Retrieved 31 March
2013
• Hopp, Wallace; Spearman, Mark (2008), Factory Physics: Foundations of Manufacturing Man-
agement (3rd ed.), ISBN 978-0-07-282403-2
• Koskela, L.; Howell, G.; Ballard, G.; Tommelein, I. (2002). “Foundations of Lean Construction”.
In Best, Rick; de Valence, Gerard. Design and Construction: Building in Value. Oxford, UK: But-
terworth-Heinemann, Elsevier. ISBN 0750651490
WT
3
Fundamental Concepts of Lean Six Sigma
Though lean six sigma was first developed for manufacturing and industrial processes,
it has expanded into other sectors such as supply chain, finance and healthcare. Over-
all labor effectiveness (OLE) is a key performance indicator that measures the perfor-
mance, utilization and quality of a workforce. The chapter strategically encompasses
and incorporates the major components and key concepts of lean six sigma, providing
a complete understanding.
WT
Machine Operator Efficiency
Machine Operator Efficiency (MOE) is a Lean Manufacturing term used to describe
the performance of an employee who operates industrial machinery. The operator’s
efficiency is measured as the time spent producing product divided by the time the op-
erator is on duty. For example: if an operator is assigned to run a CNC machine tool for
seven hours, but he only has four hours worth of continuous uninterrupted output of
workpieces - his MOE rating is 57% (4 divided by 7) for this seven-hour period of time.
There is a similar Lean Manufacturing KPI called Overall Equipment Effectiveness

(OEE). The major difference between OEE and MOE is that the OEE rating is on the
machine and the MOE is on the person.
MOE is a measure of Operator Performance only, regardless of the type of machine or the
speed of the machine he is working on. MOE only measures the operator’s ability to keep
the machine running continuously (load and unload parts faster that the automatic cycle
time of the machine). The MOE rating of an operator will travel with him as he moves
from one machine to another. This is easily accomplished because the MOE rating is a
universal calculation of time and not reliant on the complex OEE calculations of Loading,
Availability, Performance, and quality.
Industrial Dashboards can be used to display statistics for MOE ratings on each oper-
ator. To boost overall profitability for a manufacturing plant, machine operators are
sometimes compensated with a salary bonus based on their MOE ratings.
Overall Equipment Effectiveness

Overall equipment effectiveness (OEE) is a term coined by Seiichi Nakajima in the

Fundamental Concepts of Lean Six Sigma 95
1960s to evaluate how effectively a manufacturing operation is utilized. It is based on

the Harrington Emerson way of thinking regarding labor efficiency. The results are
stated in a generic form which allows comparison between manufacturing units in dif-
fering industries. It is not however an absolute measure and is best used to identify
scope for process performance improvement, and how to get the improvement. If for
example the cycle time is reduced, the OEE will increase i.e. more product is produced
for less resource. Another example is if one enterprise serves a high volume, low va-
riety market, and another enterprise serves a low volume, high variety market. More
changeovers (set-ups) will lower the OEE in comparison, but if the product is sold at a
premium, there could be more margin with a lower OEE.
OEE measurement is also commonly used as a key performance indicator (KPI) in con-
junction with lean manufacturing efforts to provide an indicator of success. OEE can be
illustrated by a brief discussion of the six metrics that comprise the system. The hierar-
WT
chy consists of two top-level measures and four underlying measures.
Top-level Metrics
Overall equipment effectiveness (OEE) and total effective equipment performance
(TEEP) are two closely related metrics that report the overall utilization of facilities,
time and material for manufacturing operations. These top view metrics directly indi-
cate the gap between actual and ideal performance.
• Overall equipment effectiveness quantifies how well a manufacturing unit per-
forms relative to its designed capacity, during the periods when it is scheduled
to run.
• Total effective equipment performance (TEEP) measures OEE against calendar
hours, i.e.: 24 hours per day, 365 days per year.
Underlying Metrics
In addition to the above measures, there are four underlying metrics that provide un-
derstanding as to why and where the OEE and TEEP gaps exist.
The measurements are described below

• Loading: The portion of the TEEP Metric that represents the percentage of total
calendar time that is actually scheduled for operation.
• Availability: The portion of the OEE Metric that represents the percentage of sched-
uled time that the operation is available to operate. Often referred to as Uptime.
• Performance: The portion of the OEE Metric that represents the speed at which
the Work Center runs as a percentage of its designed speed.
• Quality: The portion of the OEE Metric that represents the Good Units pro-

duced as a percentage of the Total Units Started. It is commonly referred to as

the first pass yield (FPY).
Calculations for OEE and TEEP

What follows is a detailed presentation of each of the six OEE / TEEP Metrics and
examples of how to perform calculations. The calculations are not particularly compli-
cated, but care must be taken as to standards that are used as the basis. Additionally,
these calculations are valid at the work center or part number level but become more
complicated if rolling up to aggregate levels.
Overall Equipment Effectiveness

OEE breaks the performance of a manufacturing unit into three separate but measur-
WT
able components: Availability, Performance, and Quality. Each component points to an
aspect of the process that can be targeted for improvement. OEE may be applied to any
individual Work Center, or rolled up to Department or Plant levels. This tool also al-
lows for drilling down for very specific analysis, such as a particular Part Number, Shift,
or any of several other parameters. It is unlikely that any manufacturing process can
run at 100% OEE. Many manufacturers benchmark their industry to set a challenging
target; 85% is not uncommon.
• OEE is calculated with the formula (Availability)*(Performance)*(Quality)
• Using the examples given below:
• (Availability= 86.6%)*(Performance=93%)*(Quality=91.3%)= (OEE=73.6%)
Alternatively, and often easier, OEE is calculated by dividing the minimum time need-
ed to produce the parts under optimal conditions by the actual time needed to produce
the parts. For example:
• Total Time: 8 hour shift or 28,800 seconds, producing 14,400 parts, or one part
every 2 seconds.
• Fastest possible cycle time is 1.5 seconds, hence only 21,600 seconds would
have been needed to produce the 14,400 parts. The remaining 7,200 seconds or
2 hours were lost.
• The OEE is now the 21,600 seconds divided by 28,800 seconds (same as mini-
mal 1.5 seconds per part divided by 2 actual seconds per part), or 75%.
Total Effective Equipment Performance

Where OEE measures effectiveness based on scheduled hours, TEEP measures effec-
tiveness against calendar hours, i.e.: 24 hours per day, 365 days per year.

TEEP, therefore, reports the ‘bottom line’ utilization of assets.
TEEP = Loading * OEE
Loading
The Loading portion of the TEEP Metric represents the percentage of time that an op-
eration is scheduled to operate compared to the total Calendar Time that is available.
The Loading Metric is a pure measurement of Schedule Effectiveness and is designed
to exclude the effects how well that operation may perform.
Calculation: Loading = Scheduled Time / Calendar Time
Example:
WT
A given Work Center is scheduled to run 5 Days per Week, 24 Hours per Day.
For a given week, the Total Calendar Time is 7 Days at 24 Hours.
Loading = (5 days x 24 hours) / (7 days x 24 hours) = 71.4%
Availability
The Availability portion of the OEE Metric represents the percentage of scheduled time
that the operation is available to operate. The Availability Metric is a pure measurement
of Uptime that is designed to exclude the effects of Quality, Performance, and Scheduled
Downtime Events. The losses due to wasted availability are called availability losses.
Example: A given Work Center is scheduled to run for an 8-hour (480 minute) shift
with a 30-minute scheduled break and experiences 60 minutes of unplanned (break-
down) time. In this case, the 30 minute break should be considered “scheduled time”
although it is planned downtime.
Operating Time = 480 Minutes Scheduled – 30 Minutes Scheduled Downtime – 60

Minutes Unscheduled Downtime = 390 Minutes
Calculation: Availability = operating time / scheduled time
Availability = 390 minutes / 480 minutes = 81.25%
Performance and Productivity

Also known as “process rate”, the Performance portion of the OEE Metric represents
the speed at which the Work Center runs as a percentage of its designed speed. The Per-
formance Metric is a pure measurement of speed that is designed to exclude the effects
of Quality and Availability. The losses due to wasted performance are also often called
speed losses. In practice it is often difficult to determine speed losses, and a common
approach is to merely assign the remaining unknown losses as speed losses.

Calculation: Performance (Productivity) = (Parts Produced * Ideal Cycle Time) / Op-

erating time
Example:
A given Work Center is scheduled to run for an 8-hour (480 minute) shift with a
30-minute scheduled break.
Operating Time = 450 Min Scheduled – 60 Min Unscheduled Downtime = 390 Minutes
The Standard Rate for the part being produced is 40 Units/Hour or 1.5 Minutes/Unit
The Work Center produces 242 Total Units during the shift. Note: The basis is Total
Units, not Good Units. The Performance metric does not penalize for Quality.
Time to Produce Parts = 242 Units * 1.5 Minutes/Unit = 363 Minutes
WT
Performance (Productivity) = 363 Minutes / 390 Minutes = 93.0%
Quality
The Quality portion of the OEE Metric represents the Good Units produced as a per-
centage of the Total Units Started. The Quality Metric is a pure measurement of Process
Yield that is designed to exclude the effects of Availability and Performance. The losses
due to defects and rework are called quality losses.
Calculation: Quality = (Units produced - defective units) / (Units produced)
Example:
242 Units are produced. 21 are defective.
(242 units produced - 21 defective units) = 221 units
221 good units / 242 total units produced = 91.32%
“Six Big Losses”
Example of OEE and Six Loss calculation

To be able to better determine what is contributing to the greatest loss and so what
areas should be targeted to improve the performance, these categories (Availability,
Performance and Quality) have been subdivided further into what is known as the ‘Six
Big Losses’ to OEE.
These are categorized as follows:
Availability Performance Quality

Planned Downtime Minor Stops Production Rejects
Breakdowns Speed Loss Rejects on Start up
The reason for identifying the losses in these categories is so that specific countermea-
sures can be applied to reduce the loss and improve the overall OEE.
WT
Heuristic
OEE is useful as a heuristic, but can break down in several circumstances. For exam-
ple, it may be far more costly to run a facility at certain times. Performance and quality
may not be independent of each other or of availability and loading. Experience may
develop over time. Since the performance of shop floor managers is at least sometimes
compared to the OEE, these numbers are often not reliable, and there are numerous
ways to fudge these numbers.
OEE has properties of a geometric mean. As such it punishes variability among its sub-
components. For example, 20% * 80% = 16%, whereas 50% * 50% = 25%. When there
are asymmetric costs associated with one or more of the components, then the model
may become less appropriate.
Consider a system where the cost of error is exceptionally high. In such a condition,
higher quality may be far more important in a proper evaluation of effectiveness than
performance or availability. OEE also to some extent assumes a closed system and a
potentially static one. If one can bring in additional resources (or lease out unused
resources to other projects or business units) then it may be more appropriate for ex-
ample to use an expected net present value analysis.
Variability in flow can also introduce important costs and risks that may merit further
modeling. Sensitivity analysis and measures of change may be helpful.
Overall Labor Effectiveness

Overall labor effectiveness (OLE) is a key performance indicator (KPI) that mea-
sures the utilization, performance, and quality of the workforce and its impact on
productivity.

Similar to overall equipment effectiveness (OEE), OLE measures availability, perfor-

mance, and quality.
• Availability – the percentage of time employees spend making effective contri-

butions
• Performance – the amount of product delivered
• Quality – the percentage of perfect or saleable product produced
OLE allows manufacturers to make operational decisions by giving them the ability to
analyze the cumulative effect of these three workforce factors on productive output,
while considering the impact of both direct and indirect labor.
OLE supports Lean and Six Sigma methodologies and applies them to workforce pro-
WT
cesses, allowing manufacturers to make labor-related activities more efficient, repeat-
able and impactful.
Measuring Availability
There are many factors that influence workforce availability and therefore the potential
output of equipment and the manufacturing plant. OLE can help manufacturers be
sure that they have the person with the right skills available at the right time by en-
abling manufacturers to locate areas where providing and scheduling the right mix of
employees can increase the number of productive hours. OLE also accounts for labor
utilization. Understanding where downtime losses are coming from and the impact
they have on production can reveal root causes—which can include machine downtime,
material delays, or absenteeism—that delay a line startup.
Calculation: Availability = Time operators are working productively / Time scheduled
Example:
Two employees (workforce) are scheduled to work 8 hour (480 minutes) shifts.
The normal shift includes a scheduled 30 minute break.
The employees experiences 60 minutes of unscheduled downtime.
Scheduled Time = 960 min − 60 min break = 900 Min
Available Time = 900 min Scheduled − 120 min Unscheduled Downtime = 780 Min
Availability = 780 Avail Min / 900 Scheduled Min = 86.67%
Measuring Performance
When employees cannot perform their work within standard times, performance can

suffer. Effective training can increase performance by improving the skills that directly
impact the quality of output. A skilled operator knows how to measure work, under-
stands the impacts of variability, and knows to stop production for corrective actions
when quality falls below specified limits. Accurately measuring this metric with OLE
can pinpoint performance improvement opportunities down to the individual level.
Calculation: Performance = Actual output of the operators / the expected output (or
labor standard)
Example:
Two employees (workforce) are scheduled to work an 8-hour (480 minute) shift with a
30-minute scheduled break.
Available Time = 960 min − 60 min break − 120 min Unscheduled Downtime = 780
WT
Min
The Standard Rate for the part being produced is 60 Units/Hour or 1 Minute/Unit
The Workforce produces 700 Total Units during the shift.
Time to Produce Parts = 700 Units * 1 Minutes/Unit = 700 Minutes
Performance = 700 minutes / 780 minutes = 89.74 %
Measuring Quality
A number of drivers contribute to quality, but the effort to improve quality can result in
a lowering of labor performance. When making the correlation between the workforce
and quality it is important to consider factors such as the training and skills of em-
ployees, whether they have access to the right tools to follow procedures, and their un-
derstanding of how their roles drive and impact quality. OLE can help manufacturers
analyze shift productivity down to a single-shift level, and determine which individual
workers are most productive, and then identify corrective actions to bring operations
up to standards.
Calculation: Quality = Saleable parts / Total parts produced
Example:
Two employees (workforce) produce 670 Good Units during a shift.
700 Units were started in order to produce the 670 Good Units.
Quality = 670 Good Units / 700 Units Started = 95.71%
Calculation
Effective use of OLE uncovers the data that fuels root-cause analysis and points to cor-

rective actions. Likewise, OLE exposes trends that can be used to diagnose more subtle
problems. It also helps managers understand whether corrective actions did, in fact,
solve problems and improve overall productivity.
Example:
Calculation: OLE = Availability x Performance x Quality
Example:
A workforce experiences...
Availability of 87%
The Work Center Performance is 89.74%.
Work Center Quality is 96%.
WT
OLE = 86.67% Availability x 89.74% Performance x 95.71% Quality = 74,44%
Labor Information Tracked

The following table provides examples of the labor information tracked by overall labor
effectiveness organized by its major categories. Using this labor information, manufac-
turers can make operational decisions to improve the cumulative effect of labor avail-
ability, performance, and quality.
Major Loss
OLE Category Example of Loss
Category
Lack of training and experience
Unplanned absenteeism
Availability
Maintenance mechanics delayed
Availability is the ratio of time the Breakdown
Poorly scheduled breaks and lunches
operators are working productively
Changeover
divided by the amount of time the Material handlers starved the machine
operators were scheduled. Set-up personnel shortages or delays
Lack of training, skills and experience
Performance Operator inefficiency due to lack of skills, ex-
Reduced Speed perience or training
Performance is the ratio of the actual
output of the operators divided by the Small stops Poor operator technique due to lack of skills,
expected output (or labor standard). experience or training
Operator error
Quality Set-up team error
Scrap or rework
Quality has many definitions, but a Maintenance mechanic error
common one is the ratio of saleable Yield or start- Set-up team error
parts divided by the total parts pro- up losses
duced. Maintenance mechanic error
Operator error

Total Productive Maintenance

In industry, total productive maintenance (TPM) is a system of maintaining and im-
proving the integrity of production and quality systems through the machines, equip-
ment, processes, and employees that add business value to an organization.
TPM focuses on keeping all equipment in top working condition to avoid breakdowns
and delays in manufacturing processes.
History
The term total productive maintenance is attributed to Nippondenso, a company that
created parts for Toyota. However, Seiichi Nakajima is regarded as the father of TPM
WT
because of his numerous contributions to TPM.
Objectives
One of the main objectives of TPM is to increase the productivity of plant and equip-
ment with a modest investment in maintenance. Total quality management (TQM) and
total productive maintenance (TPM) are considered as the key operational activities of
the quality management system. In order for TPM to be effective, the full support of
the total workforce is required. This should result in accomplishing the goal of TPM:
“Enhance the volume of the production, employee morale and job satisfaction.”
The main objective of TPM is to increase the Overall Equipment Effectiveness of plant
equipment. TPM addresses the causes for accelerated deterioration while creating the
correct environment between operators and equipment to create ownership.
OEE has three factors which are multiplied to give one measure called OEE
Performance x Availability x Quality = OEE
Each factor has two associated losses making 6 in total, these 6 losses are as follows:
Performance = (1) running at reduced speed - (2) Minor Stops
Availability = (3) Breakdowns - (4) Product changeover
Quality = (5) Startup rejects - (6) Running rejects
The objective finally is to identify then prioritize and eliminate the causes of the losses.
This is done by self-managing teams that problem solve. Employing consultants to cre-
ate this culture is common practice.
Principles
The eight pillars of TPM are mostly focused on proactive and preventive techniques for
improving equipment reliability:

1. Focused Improvement
2. Autonomous Maintenance
3. Planned Maintenance
4. Quality management
5. Development management
6. tool Management
7. Training and Education
8. Safety Health Environment
WT
With the help of these pillars we can increase productivity. Manufacturing support.
Implementation
Following are the steps involved by the implementation of TPM in an organization:
- Initial evaluation of TPM level,
- Introductory Education and Propaganda (IEP) for TPM,
- Formation of TPM committee,
- Development of master plan for TPM implementation,
- Stage by stage training to the employees and stakeholders on all eight pillars of TPM,
- Implementation preparation process,
- Establishing the TPM policies and goals and development of a road map for TPM
implementation.
According to Nicholas, the steering committee should consist of production man-

agers, maintenance managers, and engineering managers. The committee should
formulate TPM policies and strategies and give advice. This committee should be
led by a top-level executive. Also a TPM program team must rise, this program team
has oversight and coordination of implementation activities. As well, it’s lacking
some crucial activities, like starting with partial implementation. Choose the first
target area as a pilot area, this area will demonstrate the TPM concepts. Lessons
learned from early target areas/the pilot area can be applied further in the imple-
mentation process.
In the UK foundry industry an implementation model was published in several Found-

ryman magazines by the Institute of British Foundrymen. Journal articles written by

Toni Carannante CEng, offer an implementation model with proven success and re-
main available from the Institute of Cast Metals Engineers (ICME).
Difference from TQM

Total quality management and total productive maintenance are often used inter-
changeably. However, TQM and TPM share a lot of similarities, but are considered as
two different approaches in the official literature. TQM attempts to increase the quality
of goods, services and concomitant customer satisfaction by raising awareness of qual-
ity concerns across the organization.
TQM is based on five cornerstones: The product, the process that allows the product
to be produced, the organization that provides the proper environment needed for the
process to work, the leadership that guides the organization, and commitment to excel-
WT
lence throughout the organization.
In other words, TQM focuses on the quality of the product, while TPM focuses on the
equipment used to produce the products. By preventing equipment break-down, im-
proving the quality of the equipment and by standardizing the equipment (results in
less variance, so better quality), the quality of the products increases. TQM and TPM
can both result in an increase of quality. However, the way of going there is different.
TPM can be seen as a way to help achieving the goal of TQM.
Just-in-time Manufacturing
Just-In-Time (JIT) Manufacturing, also known as Just-In-Time Production or the Toy-
ota Production System (TPS), is a methodology aimed primarily at reducing flow times
within production system as well as response times from suppliers and to customers.
Following its origin and development in Japan, largely in the 1960s and 1970s and par-
ticularly at Toyota.
Alternative terms for JIT manufacturing have been used. Motorola’s choice was
short-cycle manufacturing (SCM). IBM’s was continuous-flow manufacturing (CFM),
and demand-flow manufacturing (DFM), a term handed down from consultant John
Constanza at his Institute of Technology in Colorado. Still another alternative was
mentioned by Goddard, who said that “Toyota Production System is often mistakenly
referred to as the ‘Kanban System,’” and pointed out that kanban is but one element of
TPS, as well as JIT production.
But the wide use of the term JIT manufacturing throughout the 1980s faded fast in
the 1990s, as the new term lean manufacturing became established, as “a more recent
name for JIT. As just one testament to the commonality of the two terms, Toyota pro-

duction system (TPS) has been and is widely used as a synonym for both JIT and lean
manufacturing.
History
Evolution in Japan
The exact reasons for adoption of JIT in Japan are unclear. Plenert offers four rea-
sons, paraphrased here. During Japan’s post-World War II rebuilding of industry:
1. Japan’s lack of cash made it difficult for industry to finance the big-batch, large
inventory production methods common elsewhere. 2. Japan lacked space to build
big factories loaded with inventory. 3. The Japanese islands were (and are) lack-
ing in natural resources with which to build products. 4. Japan had high unem-
ployment, which meant that labor efficiency methods were not an obvious pathway
WT
to industrial success. Thus the Japanese “leaned out” their processes. “They built
smaller factories in which the only materials housed in the factory were those on
which work was currently being done. In this way, inventory levels were kept low,
investment in in-process inventories was at a minimum, and the investment in pur-
chased natural resources was quickly turned around so that additional materials
were purchased.” Plenart goes on to explain Toyota’s key role in developing this
lean or JIT production methodology.
Migration to the West

News about JIT/TPS reached western shores in 1977 in two English-language articles:
One referred to the methodology as the “Ohno system,” after Taiichi Ohno, who was
instrumental in its development within Toyota. The other article, by Toyota authors in
an international journal, provided additional details. Finally, those and other publicity
were translated into implementations, beginning in 1980 and then quickly multiplying
throughout industry in the United States and other developed countries. A seminal
1980 event was a conference in Detroit at Ford World Headquarters co-sponsored by
the Repetitive Manufacturing Group (RMG), which had been founded 1979 within the
American Production and Inventory Control Society (APICS) to seek advances in man-
ufacturing. The principle speaker, Fujio Cho (later, president of Toyota Motor Corp.),
in explaining the Toyota system, stirred up the audience, and led to the RMG’s shifting
gears from things like automation to JIT/TPS.
At least some of audience’s stirring had to do with a perceived clash between the new
JIT regime and manufacturing resource planning (MRP II), a computer software-based
system of manufacturing planning and control that had become prominent in indus-
try in the 1960s and 1970s. Debates in professional meetings on JIT vs. MRP II were
followed by published articles, one of them titled, “The Rise and Fall of Just-in-Time.”
Less confrontational was Walt Goddard’s, “Kanban Versus MRP II—Which Is Best for
You?” in 1982. Four years later Goddard had answered his own question with a book

advocating JIT. Among the best known of MRP II’s advocates was George Plossl, who
authored two articles questioning JIT’s kanban planning method and the “japanning
of America.” But, as with Goddard, Plossl later wrote that “JIT is a concept whose time
has come.”
JIT/TPS implementations may be found in many case-study articles from the 1980s
and beyond. One article in a 1984 issue of Inc. magazine relates how Omark Industries
(chain saws, ammunition, log loaders, etc.) emerged as an extensive JIT implement-
er under its home-grown name ZIPS (zero inventory production system). At Omark’s
mother plant in Portland, Oregon, after the work force had received 40 hours of ZIPS
training, they were “turned loose” and things began to happen. A first step was to “ar-
bitrarily eliminate a week’s lead time [after which] things ran smoother. ‘People asked
that we try taking another week’s worth out.’ After that, ZIPS spread throughout the
plant’s operations ‘like an amoeba.’” The article also notes that Omark’s 20 other plants
WT
were similarly engaged in ZIPS, beginning with pilot projects. For example, at one of
Omark’s smaller plants making drill bits in Mesabi, Minnesota, “large-size drill inven-
tory was cut by 92%, productivity increased by 30%, scrap and rework ... dropped 20%,
and lead time ... from order to finished product was slashed from three weeks to three
days.” The Inc. article states that companies using JIT the most extensively include “the
Big Four, Hewlett-Packard, Motorola, Westinghouse Electric, General Electric, Deere,
and Black and Decker”.
By 1986, a case-study book on JIT in the U.S. was able to devote a full chapter to ZIPS
at Omark, along with two chapters on JIT at several Hewlett-Packard plants, and single
chapters for Harley-Davidson, John Deere, IBM-Raleigh, North Carolina, and Califor-
nia-based Apple Macintosh, a Toyota truck-bed plant, and New United Motor Manu-
facturing joint venture between Toyota and General Motors.
Two similarly-inclined books emergent in the U.K. in the same years are more inter-
national in scope. One of the books, with both conceptual articles and case studies, in-
cludes three sections on JIT practices: in Japan (e.g., at Toyota, Mazda, and Tokagawa
Electric); in Europe (jmg Bostrom, Lucas Electric, Cummins Engine, IBM, 3M, Data-
solve Ltd., Renault, Massey-Ferguson); and in the USA and Australia (Repco Manu-
facturing-Australia, Xerox Computer, and two on Hewlett-Packard). The second book,
reporting on what was billed as the First International Conference on just-in-time man-
ufacturing, includes case studies in three companies: Repco-Australia, IBM-UK, and
3M-UK. In addition, a day-2 keynote discussed JIT as applied “across all disciplines, . .
. from accounting and systems to design and production.”
Middle Era and to the Present

Three more books that include JIT implementations were published in 1993, 1995, and
1996, which are start-up years of the lean manufacturing/lean management movement
that was launched in 1990 with publication of the book, The Machine That Changed the

World. That one, along with other books, articles, and case studies on lean, were sup-
planting JIT terminology in the 1990s and beyond. The same period, however, saw the
rise of books and articles with similar concepts and methodologies but with alternative
names, including cycle time management, time-based competition, quick-response
manufacturing, flow, and pull-based production systems.
However, there is more to JIT than its usual manufacturing-centered explication. Inas-
much as manufacturing ends with order-fulfillment to distributors, retailers, and end
users, and also includes remanufacturing, repair, and warranty claims, JIT’s concepts
and methods have application downstream from manufacturing itself. A 1993 book on
“world-class distribution logistics” discusses kanban links from factories onward. And
a manufacturer-to-retailer model developed in the U.S. in the 1980s, referred to as
quick response, has morphed over time to what is called fast fashion.
WT
Methodology
Sepheri provides a list of methodologies of JIT manufacturing that “are important but
not exhaustive”:
• Housekeeping – physical organization and discipline.
• Make it right the first time – elimination of defects.
• Setup reduction – flexible changeover approaches.
• Lot sizes of one – the ultimate lot size and flexibility.
• Uniform plant load – leveling as a control mechanism.
• Balanced flow – organizing flow scheduling throughput.
• Skill diversification – multi-functional workers.
• Control by visibility – communication media for activity.
• Preventive maintenance – flawless running, no defects.
• Fitness for use – producibility, design for process.
• Compact plant layout – product-oriented design.
• Streamlining movements – smoothing materials handling.
• Supplier networks – extensions of the factory.
• Worker involvement – small group improvement activities.
• Cellular manufacturing – production methods for flow.
• Pull system – signal [kanban] replenishment/resupply systems.

Objectives and Benefits

Objectives and benefits of JIT manufacturing may be stated in two primary ways: first,
in specific and quantitative terms, via published case studies; second, general listings
and discussion.
A case-study summary from Daman Products in 1999 lists the following benefits: re-
duced cycle times 97%, setup times 50%, lead times from 4 to 8 weeks to 5 to 10 days,
flow distance 90% – achieved via four focused (cellular) factories, pull scheduling, kan-
ban, visual management, and employee empowerment.
Another study from NCR (Dundee Scotland) in 1998, a producer of make-to-order au-
tomated teller machines, includes some of the same benefits while also focusing on JIT
purchasing: In switching to JIT over a weekend in 1998, eliminated buffer inventories,
reducing inventory from 47 days to 5 days, flow time from 15 days to 2 days, with 60%
WT
of purchased parts arriving JIT and 77% going dock to line, and suppliers reduced from
480 to 165.
Hewlett-Packard, one of western industry’s earliest JIT implementers, provides a set

of four case studies from four H-P divisions during the mid-1980s. The four divisions,
Greeley, Fort Collins, Computer Systems, and Vancouver, employed some but not all of
the same measures. At the time about half of H-P’s 52 divisions had adopted JIT.
Computer Sys-
Greeley Fort Collins Vancouver
tems
Inventory reduction 2.8 months 75% 75%
Labor cost reduction 30% 15% 50%
Space reduction 50% 30% 33% 40%
22 days to 1
WIP stock reduction
day
Production increase 100%
30% scrap, 79% 30% scrap &
Quality improvement 80% scrap
rework rework
17 days to 30
Throughput time reduction 50%
hours
Standard hours reduction 50%
No. of shipments increase 20%
Potential Risks
According to Williams, it becomes necessary to find suppliers that are close by or can
supply materials quickly with limited advance notice. When ordering small quantities
of materials, suppliers’ minimum order policies may pose a problem, though.
Employees are at risk of precarious work when employed by factories that utilize just-

in-time and flexible production techniques. A longitudinal study of US workers since

1970 indicates employers seeking to easily adjust their workforce in response to supply
and demand conditions respond by creating more nonstandard work arrangements,
such as contracting and temporary work.
Andon (Manufacturing)
WT
Signboard
Andon is a manufacturing term referring to a system to notify management, mainte-

nance, and other workers of a quality or process problem. The centerpiece is a device
incorporating signal lights to indicate which workstation has the problem. The alert
can be activated manually by a worker using a pullcord or button, or may be activated
automatically by the production equipment itself. The system may include a means to
stop production so the issue can be corrected. Some modern alert systems incorporate
audio alarms, text, or other displays.
An Andon System is one of the principal elements of the Jidoka quality-control method
pioneered by Toyota as part of the Toyota Production System and therefore now part of
the Lean approach. It gives the worker the ability, and moreover the empowerment, to
stop production when a defect is found, and immediately call for assistance. Common
reasons for manual activation of the Andon are part shortage, defect created or found,
tool malfunction, or the existence of a safety problem. Work is stopped until a solution
has been found. The alerts may be logged to a database so that they can be studied as
part of a continuous-improvement program.
The system typically indicates where the alert was generated, and may also provide a
description of the trouble. Modern Andon systems can include text, graphics, or audio
elements. Audio alerts may be done with coded tones, music with different tunes corre-
sponding to the various alerts, or pre-recorded verbal messages.
The concept/process of giving a non-management (production line) worker the author-

ity to stop the production line because of a suspected quality issue is generally thought
to have been pioneered by W. Edwards Deming. Many in Japan credit Deming as the

inspiration for what has become known as the Japanese post-war economic miracle
of 1950 to 1960, when Japan rose from the ashes of war to start Japan on the road to
becoming the second largest economy in the world through processes founded on the
ideas Deming taught:
• Better design of products to improve service
• Higher level of uniform product quality
• Improvement of product testing in the workplace and in research centers
• Greater sales through side [global] markets
Usage of the word originated within Japanese manufacturing companies, and in En-
glish is a loanword from a Japanese word for a paper lantern.
WT
References
• Sugimori, Y., et al, Toyota production system and kanban system: materialization of just-in-time
and respect-for-human system, International Journal of Production Research. 15 (1977) 553–564
• Hyer, Nancy; Wemmerlov, Urban (2001). Reorganizing the Factory: Competing Through Cellular
Manufacturing. CRC Press. p. 41. ISBN 9781563272288
• Prabhuswamy, M; Nagesh, P; Ravikumar, K (February 2013). “Statistical Analysis and Reliability

Estimation of Total Productive Maintenance”. IUP Journal of Operations Management. Roches-
ter, NY: Social Science Electronic Publishing. XII (1): 7–20. SSRN 2246601
• Womack, James P.; Jones, Daniel T.; Roos, Daniel (2007). The Machine That Changed the World:
The Story of Lean Production. Simon and Schuster. ISBN 9781416554523. Retrieved 24 May 2017
• Black, J. Temple; Hunter, Steve, L. (2003). Lean Manufacturing Systems and Cell Design. Society
of Manufacturing Engineers. p. 41. ISBN 9780872636477
• Robert J. Everett & Amrik S. Sohal, (1991) “Individual Involvement and Intervention in Quality
Improvement Programmes: Using the Andon System”, International Journal of Quality & Reli-
ability Management, Vol. 8 Iss: 2. Accessed 5 December 2014

4
Understanding Six Sigma
Six sigma is a managerial process that seeks to eliminate defects as well as reduce vari-
ability. DMAIC is a methodology of six sigma that seeks to improve an existing business
project. The topics discussed in the chapter are of great importance to broaden the ex-
isting knowledge on lean six sigma.
WT
Six Sigma
Six Sigma (6σ) is a set of techniques and tools for process improvement. It was intro-
duced by engineers Bill Smith & Mikel J Harry while working at Motorola in 1986. Jack
Welch made it central to his business strategy at General Electric in 1995.
It seeks to improve the quality of the output of a process by identifying and removing the
causes of defects and minimizing variability in manufacturing and business processes.
It uses a set of quality management methods, mainly empirical, statistical methods, and
creates a special infrastructure of people within the organization who are experts in these
methods. Each Six Sigma project carried out within an organization follows a defined
sequence of steps and has specific value targets, for example: reduce process cycle time,
reduce pollution, reduce costs, increase customer satisfaction, and increase profits.
The term Six Sigma (capitalized because it was written that way when registered as a
Motorola trademark on December 28, 1993) originated from terminology associated
with statistical modeling of manufacturing processes. The maturity of a manufactur-
ing process can be described by a sigma rating indicating its yield or the percentage
of defect-free products it creates. A six sigma process is one in which 99.99966% of
all opportunities to produce some feature of a part are statistically expected to be free
of defects (3.4 defective features per million opportunities). Motorola set a goal of “six
sigma” for all of its manufacturing operations, and this goal became a by-word for the
management and engineering practices used to achieve it.
Doctrine
Six Sigma doctrine asserts:
• Continuous efforts to achieve stable and predictable process results (e.g. by re-
ducing process variation) are of vital importance to business success.

Understanding Six Sigma 113
• Manufacturing and business processes have characteristics that can be defined,

measured, analyzed, improved, and controlled.
• Achieving sustained quality improvement requires commitment from the entire

organization, particularly from top-level management.
Features that set Six Sigma apart from previous quality-improvement initiatives in-
clude:
• A clear focus on achieving measurable and quantifiable financial returns from

any Six Sigma project.
• An increased emphasis on strong and passionate management leadership and

support.
WT
• A clear commitment to making decisions on the basis of verifiable data and sta-
tistical methods, rather than assumptions and guesswork.
The term “six sigma” comes from statistics and is used in statistical quality control,
which evaluates process capability. Originally, it referred to the ability of manufac-
turing processes to produce a very high proportion of output within specification.
Processes that operate with “six sigma quality” over the short term are assumed to
produce long-term defect levels below 3.4 defects per million opportunities (DPMO).
Six Sigma’s implicit goal is to improve all processes, but not to the 3.4 DPMO level
necessarily. Organizations need to determine an appropriate sigma level for each of
their most important processes and strive to achieve these. As a result of this goal,
it is incumbent on management of the organization to prioritize areas of improve-
ment.
“Six Sigma” was registered June 11, 1991 as U.S. Service Mark 1,647,704. In 2005 Mo-
torola attributed over US$17 billion in savings to Six Sigma.
Other early adopters of Six Sigma include Honeywell and General Electric, where Jack
Welch introduced the method. By the late 1990s, about two-thirds of the Fortune 500
organizations had begun Six Sigma initiatives with the aim of reducing costs and im-
proving quality.
In recent years, some practitioners have combined Six Sigma ideas with lean manufac-
turing to create a methodology named Lean Six Sigma. The Lean Six Sigma methodol-
ogy views lean manufacturing, which addresses process flow and waste issues, and Six
Sigma, with its focus on variation and design, as complementary disciplines aimed at
promoting “business and operational excellence”. Companies such as GE, Accenture,
Verizon, GENPACT, and IBM use Lean Six Sigma to focus transformation efforts not
just on efficiency but also on growth. It serves as a foundation for innovation through-
out the organization, from manufacturing and software development to sales and ser-
vice delivery functions.

The International Organization for Standardization (ISO) has published in 2011 the
first standard “ISO 13053:2011” defining a Six Sigma process. Other “standards” are
created mostly by universities or companies that have so-called first-party certification
programs for Six Sigma.
Difference between Related Concepts

Lean management and Six Sigma are two concepts which share similar methodologies
and tools. Both programs are Japanese influenced, but they are two different programs.
Lean management is focused on eliminating waste and ensuring efficiency while Six
Sigma’s focus is on eliminating defects and reducing variability.
Methodologies
WT
Six Sigma projects follow two project methodologies inspired by Deming’s Plan-Do-
Check-Act Cycle. These methodologies, composed of five phases each, bear the acro-
nyms DMAIC and DMADV.
• DMAIC is used for projects aimed at improving an existing business process.
• DMADV is used for projects aimed at creating new product or process designs.
DMAIC
The five steps of DMAIC
The DMAIC project methodology has five phases:

• Define the system, the voice of the customer and their requirements, and the
project goals, specifically.
• Measure key aspects of the current process and collect relevant data; calculate
the ‘as-is’ Process Capability.
• Analyze the data to investigate and verify cause-and-effect relationships. De-
termine what the relationships are, and attempt to ensure that all factors have
been considered. Seek out root cause of the defect under investigation.
• Improve or optimize the current process based upon data analysis using tech-
niques such as design of experiments, poka yoke or mistake proofing, and stan-
dard work to create a new, future state process. Set up pilot runs to establish
process capability.

• Control the future state process to ensure that any deviations from the target
are corrected before they result in defects. Implement control systems such as
statistical process control, production boards, visual workplaces, and contin-
uously monitor the process. This process is repeated until the desired quality
level is obtained.
Some organizations add a Recognize step at the beginning, which is to recognize the
right problem to work on, thus yielding an RDMAIC methodology.
DMADV or DFSS
WT
The five steps of DMADV
The DMADV project methodology, known as DFSS (“Design For Six Sigma”), features
five phases:
• Define design goals that are consistent with customer demands and the enter-
prise strategy.
• Measure and identify CTQs (characteristics that are Critical To Quality), mea-
sure product capabilities, production process capability, and measure risks.
• Analyze to develop and design alternatives
• Design an improved alternative, best suited per analysis in the previous step
• Verify the design, set up pilot runs, implement the production process and hand
it over to the process owner(s).
Quality Management Tools and Methods

Within the individual phases of a DMAIC or DMADV project, Six Sigma utilizes many
established quality-management tools that are also used outside Six Sigma. The follow-
ing table shows an overview of the main methods used.
• 5 Whys
• Statistical and fitting tools
o Analysis of variance
o General linear model

o ANOVA Gauge R&R
o Regression analysis
o Correlation
o Scatter diagram
o Chi-squared test
• Axiomatic design
• Business Process Mapping/Check sheet
• Cause & effects diagram (also known as fishbone or Ishikawa diagram)
WT
• Control chart/Control plan (also known as a swimlane map)/Run charts
• Cost-benefit analysis
• CTQ tree
• Design of experiments/Stratification
• Histograms/Pareto analysis/Pareto chart
• Pick chart/Process capability/Rolled throughput yield
• Quality Function Deployment (QFD)
• Quantitative marketing research through use of Enterprise Feedback Manage-

ment (EFM) systems
• Root cause analysis
• SIPOC analysis (Suppliers, Inputs, Process, Outputs, Customers)
• COPIS analysis (Customer centric version/perspective of SIPOC)
• Taguchi methods/Taguchi Loss Function
• Value stream mapping
Implementation Roles
One key innovation of Six Sigma involves the absolute “professionalizing” of quality
management functions. Prior to Six Sigma, quality management in practice was largely
relegated to the production floor and to statisticians in a separate quality department.
Formal Six Sigma programs adopt a kind of elite ranking terminology (similar to some
martial arts systems, like judo) to define a hierarchy (and special career path) that in-
cludes all business functions and levels.

Six Sigma identifies several key roles for its successful implementation.
• Executive Leadership includes the CEO and other members of top management.
They are responsible for setting up a vision for Six Sigma implementation. They
also empower the other role holders with the freedom and resources to explore
new ideas for breakthrough improvements by transcending departmental bar-
riers and overcoming inherent resistance to change.
• Champions take responsibility for Six Sigma implementation across the orga-
nization in an integrated manner. The Executive Leadership draws them from
upper management. Champions also act as mentors to Black Belts.
• Master Black Belts, identified by Champions, act as in-house coaches on Six

Sigma. They devote 100% of their time to Six Sigma. They assist Champions and
guide Black Belts and Green Belts. Apart from statistical tasks, they spend their
WT
time on ensuring consistent application of Six Sigma across various functions
and departments.
• Black Belts operate under Master Black Belts to apply Six Sigma methodology
to specific projects. They devote 100% of their valued time to Six Sigma. They
primarily focus on Six Sigma project execution and special leadership with spe-
cial tasks, whereas Champions and Master Black Belts focus on identifying proj-
ects/functions for Six Sigma.
• Green Belts are the employees who take up Six Sigma implementation along
with their other job responsibilities, operating under the guidance of Black
Belts.
According to proponents of the system, special training is needed for all of these prac-
titioners to ensure that they follow the methodology and use the data-driven approach
correctly.
Some organizations use additional belt colours, such as Yellow Belts, for employees
that have basic training in Six Sigma tools and generally participate in projects and
“White belts” for those locally trained in the concepts but do not participate in the proj-
ect team. “Orange belts” are also mentioned to be used for special cases.
Certification
General Electric and Motorola developed certification programs as part of their Six Sig-
ma implementation, verifying individuals’ command of the Six Sigma methods at the
relevant skill level (Green Belt, Black Belt etc.). Following this approach, many orga-
nizations in the 1990s started offering Six Sigma certifications to their employees. Cri-
teria for Green Belt and Black Belt certification vary; some companies simply require
participation in a course and a Six Sigma project. There is no standard certification

body, and different certification services are offered by various quality associations and
other providers against a fee. The American Society for Quality for example requires
Black Belt applicants to pass a written exam and to provide a signed affidavit stating
that they have completed two projects or one project combined with three years’ prac-
tical experience in the body of knowledge.
Etymology of “Six Sigma Process”

The term “six sigma process” comes from the notion that if one has six standard devi-
ations between the process mean and the nearest specification limit, as shown in the
graph, practically no items will fail to meet specifications. This is based on the calcula-
tion method employed in process capability studies.
WT
Graph of the normal distribution, which underlies the statistical assumptions of the Six Sigma model.
In the centre at 0, the Greek letter µ (mu) marks the mean, with the horizontal axis showing distance
from the mean, marked in standard deviations and given the letter σ (sigma). The greater the standard
deviation, the greater is the spread of values encountered. For the green curve shown above, µ = 0 and
σ = 1. The upper and lower specification limits (marked USL and LSL) are at a distance of 6σ from the
mean. Because of the properties of the normal distribution, values lying that far away from the mean are
extremely unlikely: approximately 1 in a billion too low, and the same too high. Even if the mean were to
move right or left by 1.5σ at some point in the future (1.5 sigma shift, coloured red and blue), there is still
a good safety cushion. This is why Six Sigma aims to have processes where the mean is at least 6σ away
from the nearest specification limit.
Capability studies measure the number of standard deviations between the process
mean and the nearest specification limit in sigma units, represented by the Greek letter
σ (sigma). As process standard deviation goes up, or the mean of the process moves
away from the center of the tolerance, fewer standard deviations will fit between the
mean and the nearest specification limit, decreasing the sigma number and increasing
the likelihood of items outside specification. One should also note that calculation of
Sigma levels for a process data is independent of the data being normally distributed.
In one of the criticisms to Six Sigma, practitioners using this approach spend a lot of
time transforming data from non-normal to normal using transformation techniques.
It must be said that Sigma levels can be determined for process data that has evidence
of non-normality.

Role of the 1.5 sigma Shift

Experience has shown that processes usually do not perform as well in the long term
as they do in the short term. As a result, the number of sigmas that will fit between the
process mean and the nearest specification limit may well drop over time, compared
to an initial short-term study. To account for this real-life increase in process varia-
tion over time, an empirically based 1.5 sigma shift is introduced into the calculation.
According to this idea, a process that fits 6 sigma between the process mean and the
nearest specification limit in a short-term study will in the long term fit only 4.5 sig-
ma – either because the process mean will move over time, or because the long-term
standard deviation of the process will be greater than that observed in the short term,
or both.
Hence the widely accepted definition of a six sigma process is a process that produces 3.4
WT
defective parts per million opportunities (DPMO). This is based on the fact that a process
that is normally distributed will have 3.4 parts per million outside the limits, when the
limits are six sigma from the “original” mean of zero and the process mean is then shift-
ed by 1.5 sigma (and therefore, the six sigma limits are no longer symmetrical about the
mean). The former six sigma distribution, when under the effect of the 1.5 sigma shift, is
commonly referred to as a 4.5 sigma process. However, it should be noted that the failure
rate of a six sigma distribution with the mean shifted 1.5 sigma is not equivalent to the
failure rate of a 4.5 sigma process with the mean centered on zero. This allows for the fact
that special causes may result in a deterioration in process performance over time and is
designed to prevent underestimation of the defect levels likely to be encountered in re-
al-life operation.
The role of the sigma shift is mainly academic. The purpose of six sigma is to generate
organizational performance improvement. It is up to the organization to determine,
based on customer expectations, what the appropriate sigma level of a process is. The
purpose of the sigma value is as a comparative figure to determine whether a process
is improving, deteriorating, stagnant or non-competitive with others in the same busi-
ness. Six sigma (3.4 DPMO) is not the goal of all processes.
Sigma Levels
The table below gives long-term DPMO values corresponding to various short-term
sigma levels.
These figures assume that the process mean will shift by 1.5 sigma toward the side with
the critical specification limit. In other words, they assume that after the initial study
determining the short-term sigma level, the long-term Cpk value will turn out to be 0.5
less than the short-term Cpk value. So, for example, the DPMO figure given for 1 sigma
assumes that the long-term process mean will be 0.5 sigma beyond the specification
limit (Cpk = –0.17), rather than 1 sigma within it, as it was in the short-term study (Cpk =

0.33). Note that the defect percentages indicate only defects exceeding the specification
limit to which the process mean is nearest. Defects beyond the far specification limit
are not included in the percentages.
WT
A control chart depicting a process that experienced a 1.5 sigma drift in the process mean toward the up-
per specification limit starting at midnight. Control charts are used to maintain 6 sigma quality by signal-
ing when quality professionals should investigate a process to find and eliminate special-cause variation.
The formula used here to calculate the DPMO is thus
DPMO 1, 000, 000(1 − φ(level − 1.5))

=
Sigma Sigma (with Percent Percentage Short-term Long-term

DPMO
level 1.5σ shift) defective yield Cpk Ppk
1 −0.5 691,462 69% 31% 0.33 −0.17
2 0.5 308,538 31% 69% 0.67 0.17
3 1.5 66,807 6.7% 93.3% 1.00 0.5
4 2.5 6,210 0.62% 99.38% 1.33 0.83
5 3.5 233 0.023% 99.977% 1.67 1.17
6 4.5 3.4 0.00034% 99.99966% 2.00 1.5
7 5.5 0.019 0.0000019% 99.9999981% 2.33 1.83
Software
Application
Six Sigma mostly finds application in large organizations. An important factor in the
spread of Six Sigma was GE’s 1998 announcement of $350 million in savings thanks
to Six Sigma, a figure that later grew to more than $1 billion. According to industry
consultants like Thomas Pyzdek and John Kullmann, companies with fewer than 500
employees are less suited to Six Sigma implementation or need to adapt the standard

approach to make it work for them. Six Sigma however contains a large number of tools
and techniques that work well in small to mid-size organizations. The fact that an or-
ganization is not big enough to be able to afford Black Belts does not diminish its abil-
ities to make improvements using this set of tools and techniques. The infrastructure
described as necessary to support Six Sigma is a result of the size of the organization
rather than a requirement of Six Sigma itself.
Criticism
Lack of Originality
Quality expert Joseph M. Juran described Six Sigma as “a basic version of quality im-
provement”, stating that “there is nothing new there. It includes what we used to call
facilitators. They’ve adopted more flamboyant terms, like belts with different colors. I
WT
think that concept has merit to set apart, to create specialists who can be very helpful.
Again, that’s not a new idea. The American Society for Quality long ago established
certificates, such as for reliability engineers.”
Inadequate for Complex Manufacturing

Quality expert Philip B. Crosby pointed out that the Six Sigma standard doesn’t go far
enough—customers deserve defect-free products every time. For example, under the
Six Sigma standard, semiconductors which require the flawless etching of millions of
tiny circuits onto a single chip are all 100% unusable.
Role of Consultants
The use of “Black Belts” as itinerant change agents has fostered an industry of training
and certification. Critics have argued there is overselling of Six Sigma by too great a
number of consulting firms, many of which claim expertise in Six Sigma when they
have only a rudimentary understanding of the tools and techniques involved or the
markets or industries in which they are acting.
Potential Negative Effects

A Fortune article stated that “of 58 large companies that have announced Six Sigma pro-
grams, 91 percent have trailed the S&P 500 since”. The statement was attributed to “an
analysis by Charles Holland of consulting firm Qualpro (which espouses a competing
quality-improvement process)”. The summary of the article is that Six Sigma is effective
at what it is intended to do, but that it is “narrowly designed to fix an existing process”
and does not help in “coming up with new products or disruptive technologies.”
Over-reliance on Statistical Tools

A more direct criticism is the “rigid” nature of Six Sigma with its over-reliance on meth-

ods and tools. In most cases, more attention is paid to reducing variation and searching
for any significant factors and less attention is paid to developing robustness in the first
place (which can altogether eliminate the need for reducing variation). The extensive
reliance on significance testing and use of multiple regression techniques increases the
risk of making commonly unknown types of statistical errors or mistakes. A possible
consequence of Six Sigma’s array of P-value misconceptions is the false belief that the
probability of a conclusion being in error can be calculated from the data in a single
experiment without reference to external evidence or the plausibility of the underlying
mechanism. One of the most serious but all-too-common misuses of inferential sta-
tistics is to take a model that was developed through exploratory model building and
subject it to the same sorts of statistical tests that are used to validate a model that was
specified in advance.
Another comment refers to the often mentioned Transfer Function, which seems to
WT
be a flawed theory if looked at in detail. Since significance tests were first popularized
many objections have been voiced by prominent and respected statisticians. The vol-
ume of criticism and rebuttal has filled books with language seldom used in the schol-
arly debate of a dry subject. Much of the first criticism was already published more than
40 years ago. Refer to: Statistical hypothesis testing#Criticism for details.
Articles featuring critics have appeared in the November–December 2006 issue of USA
Army Logistician regarding Six-Sigma: “The dangers of a single paradigmatic orientation
(in this case, that of technical rationality) can blind us to values associated with double-loop
learning and the learning organization, organization adaptability, workforce creativity and
development, humanizing the workplace, cultural awareness, and strategy making.”
Nassim Nicholas Taleb considers risk managers little more than “blind users” of statis-
tical tools and methods. He states that statistics is fundamentally incomplete as a field
as it cannot predict the risk of rare events — something Six Sigma is specially concerned
with. Furthermore, errors in prediction are likely to occur as a result of ignorance for or
distinction between epistemic and other uncertainties. These errors are the biggest in
time variant (reliability) related failures.
Stifling Creativity In Research Environments

According to an article by John Dodge, editor in chief of Design News, use of Six Sig-
ma is inappropriate in a research environment. Dodge states “excessive metrics, steps,
measurements and Six Sigma’s intense focus on reducing variability water down the
discovery process. Under Six Sigma, the free-wheeling nature of brainstorming and the
serendipitous side of discovery is stifled.” He concludes “there’s general agreement that
freedom in basic or pure research is preferable while Six Sigma works best in incremen-
tal innovation when there’s an expressed commercial goal.”
A BusinessWeek article says that James McNerney’s introduction of Six Sigma at 3M

had the effect of stifling creativity and reports its removal from the research function.
It cites two Wharton School professors who say that Six Sigma leads to incremental in-
novation at the expense of blue skies research. This phenomenon is further explored in
the book Going Lean, which describes a related approach known as lean dynamics and
provides data to show that Ford’s “6 Sigma” program did little to change its fortunes.
Lack of Systematic Documentation

One criticism voiced by Yasar Jarrar and Andy Neely from the Cranfield School of Man-
agement’s Centre for Business Performance is that while Six Sigma is a powerful ap-
proach, it can also unduly dominate an organization’s culture; and they add that much
of the Six Sigma literature – in a remarkable way (six-sigma claims to be evidence,
scientifically based) – lacks academic rigor:
WT
One final criticism, probably more to the Six Sigma literature than concepts, relates to
the evidence for Six Sigma’s success. So far, documented case studies using the Six Sig-
ma methods are presented as the strongest evidence for its success. However, looking
at these documented cases, and apart from a few that are detailed from the experience
of leading organizations like GE and Motorola, most cases are not documented in a sys-
temic or academic manner. In fact, the majority are case studies illustrated on websites,
and are, at best, sketchy. They provide no mention of any specific Six Sigma methods
that were used to resolve the problems. It has been argued that by relying on the Six
Sigma criteria, management is lulled into the idea that something is being done about
quality, whereas any resulting improvement is accidental (Latzko 1995). Thus, when
looking at the evidence put forward for Six Sigma success, mostly by consultants and
people with vested interests, the question that begs to be asked is: are we making a true
improvement with Six Sigma methods or just getting skilled at telling stories? Everyone
seems to believe that we are making true improvements, but there is some way to go to
document these empirically and clarify the causal relations.
1.5 Sigma Shift

The statistician Donald J. Wheeler has dismissed the 1.5 sigma shift as “goofy” because
of its arbitrary nature. Its universal applicability is seen as doubtful.
The 1.5 sigma shift has also become contentious because it results in stated “sigma levels”
that reflect short-term rather than long-term performance: a process that has long-term de-
fect levels corresponding to 4.5 sigma performance is, by Six Sigma convention, described
as a “six sigma process.” The accepted Six Sigma scoring system thus cannot be equated to
actual normal distribution probabilities for the stated number of standard deviations, and
this has been a key bone of contention over how Six Sigma measures are defined. The fact
that it is rarely explained that a “6 sigma” process will have long-term defect rates corre-
sponding to 4.5 sigma performance rather than actual 6 sigma performance has led several
commentators to express the opinion that Six Sigma is a confidence trick.

SigmaXL
SigmaXL is a graphical and statistical add-in tool for Microsoft Excel.
SigmaXL is a commonly used tool for statistical and graphical data analysis. It is also
often used in Six Sigma training and implementation. It has been used in medical and
scientific research articles. In addition to being a standalone software package, Sig-
maXL is also included in the DiscoverSim software package, created by SigmaXL Inc.
SigmaXL was developed in 1997 by John Noguera and Cynthia Cumby. It is distributed
by SigmaXL Inc., a privately owned company located in Kitchener, Ontario, Canada.
SigmaXL’s Graphical Tools Include:

• SPC Control Charts
WT
• Pareto Charts
• EZ Pivot/Pivot Charts
• Histograms
• Dotplots
• Boxplots
• Normal Probability Plots
• Run Charts
• Multi-Vari Charts
• Scatter Plots
• Analysis of Means (ANOM) Charts
SigmaXL’s Statistical Tools Include:

• Descriptive Statistics
• Equivalence Tests (TOST)
• One and Two Sample t-Tests
• Paired t-Tests
• One-Way and Two-Way ANOVA
• Equal Variance tests
• Correlation Matrix
• Multiple Linear Regression

• Logistic Regression
• Chi-square and Fisher’s Exact tests
• Nonparametric and Nonparametric Exact tests
• Minimum Sample Size for Robust t-Tests and ANOVA
• Power & Sample Size Calculators
• Tolerance Interval Calculator (Normal Exact)
SigmaXL also includes tools for data manipulation, measurement systems analysis,
process capability (including nonnormal process capability), reliability/Weibull analy-
sis and design of experiments.
SigmaXL 8.0 (the current stable release) is compatible with Microsoft Excel 2010 (32-
WT
bit & 64-bit), 2013 (32-bit & 64-bit), 2016 (32-bit & 64-bit) and OS X Snow Leopard
(10.6) or later.
Root Cause Analysis

Root cause analysis (RCA) is a method of problem solving used for identifying the root
causes of faults or problems. A factor is considered a root cause if removal thereof
from the problem-fault-sequence prevents the final undesirable event from recurring;
whereas a causal factor is one that affects an event’s outcome, but is not a root cause.
Though removing a causal factor can benefit an outcome, it does not prevent its recur-
rence with certainty.
For example, imagine a fictional segment of students who received poor testing scores.
After initial investigation, it was verified that students taking tests in the final period of
the school day got lower scores. Further investigation revealed that late in the day, the
students lacked ability to focus. Even further investigation revealed that the reason for
the lack of focus was hunger. So, the root cause of the poor testing scores was hunger,
remedied by moving the testing time to soon after lunch.
As another example, imagine an investigation into a machine that stopped because it

overloaded and the little fuse blew. Investigation shows that the machine overloaded
because it had a bearing that wasn’t being sufficiently lubricated. The investigation pro-
ceeds further and finds that the automatic lubrication mechanism had a pump which
was not pumping sufficiently, hence the lack of lubrication. Investigation of the pump
shows that it has a worn shaft. Investigation of why the shaft was worn discovers that
there isn’t an adequate mechanism to prevent metal scrap getting into the pump. This
enabled scrap to get into the pump, and damage it. The root cause of the problem is
therefore that metal scrap can contaminate the lubrication system. Fixing this prob-
lem ought to prevent the whole sequence of events recurring. Compare this with an
investigation that does not find the root cause: replacing the fuse, the bearing, or the

lubrication pump will probably allow the machine to go back into operation for a while.
But there is a risk that the problem will simply recur, until the root cause is dealt with.
History
Following the introduction of Kepner–Tregoe analysis—which had its origins in the
highly complex arena of rocket design, development and launch—RCA arose in the
1950s as a formal study by the National Aeronautics and Space Administration (NASA)
in the United States. New methods of problem analysis developed by NASA included a
high level assessment practice called MORT (Management Oversight Risk Tree). MORT
differed from RCA by assigning causes to common classes of cause shortcomings that
could be summarized into a short list. These included work practice, procedures, man-
agement, fatigue, time pressure, along with several others. For example: if an aircraft
accident occurred as a result of adverse weather conditions augmented by pressure to
WT
leave on time; failure to observe weather precautions could indicate a management or
training problem; and lack of appropriate weather concern might indict work practices.
Because several measures (methods) may effectively address the root causes of a prob-
lem, RCA is an iterative process and a tool of continuous improvement.
Uses
RCA is applied to methodically identify and correct the root causes of events, rath-
er than to simply address the symptomatic result. Focusing correction on root causes
has the goal of entirely preventing problem recurrence. Conversely, RCFA (Root Cause
Failure Analysis) recognizes that complete prevention of recurrence by one corrective
action is not always possible.
RCA is typically used as a reactive method of identifying event(s) causes, revealing

problems and solving them. Analysis is done after an event has occurred. Insights in
RCA make it potentially useful as a preemptive method. In that event, RCA can be used
to forecast or predict probable events even before they occur. While one follows the
other, RCA is a completely separate process to incident management.
Classification
Rather than one sharply defined methodology, RCA comprises many different tools,
processes, and philosophies. However, several very-broadly defined approaches or
“schools” can be identified by their basic approach or field of origin: safety-based, pro-
duction-based, assembly-based, process-based, failure-based, and systems-based.
• Safety-based RCA arose from the fields of accident analysis and occupational
safety and health.
• Production-based RCA has roots in the field of quality control for industrial
manufacturing.

• Process-based RCA, a follow-on to production-based RCA, broadens the scope

of RCA to include business processes.
• Failure-based RCA originates in the practice of failure analysis as employed in

engineering and maintenance.
• Systems-based RCA has emerged as an amalgam of the preceding schools, in-

corporating elements from other fields such as change management, risk man-
agement and systems analysis.
Despite the different approaches among the various schools of root cause analysis, all
share some common principles. Several general processes for performing RCA can also
be defined.
General Principles
WT
1. The primary aim of root cause analysis is: to identify the factors that resulted in
the nature, the magnitude, the location, and the timing of the harmful outcomes
(consequences) of one or more past events; to determine what behaviors, actions,
inactions, or conditions need to be changed; to prevent recurrence of similar harm-
ful outcomes; and to identify lessons that may promote the achievement of better
consequences. (“Success” is defined as the near-certain prevention of recurrence).
2. To be effective, root cause analysis must be performed systematically, usually
as part of an investigation, with conclusions and root causes that are identified
backed up by documented evidence. A team effort is typically required.
3. There may be more than one root cause for an event or a problem, therefore the
difficult part is demonstrating the persistence and sustaining the effort required
to determine them.
4. The purpose of identifying all solutions to a problem is to prevent recurrence at
lowest cost in the simplest way. If there are alternatives that are equally effec-
tive, then the simplest or lowest cost approach is preferred.
5. The root causes identified will depend on the way in which the problem or event
is defined. Effective problem statements and event descriptions (as failures, for
example) are helpful and usually required to ensure the execution of appropri-
ate analyses.
6. One logical way to trace down root causes is by utilizing hierarchical cluster-
ing data-mining solutions (such as graph-theory-based data mining). A root
cause is defined in that context as “the conditions that enable one or more caus-
es”. Root causes can be deductively sorted out from upper groups of which the
groups include a specific cause.
7. To be effective, the analysis should establish a sequence of events or timeline

for understanding the relationships between contributory (causal) factors, root

cause(s) and the defined problem or event to be prevented.
8. Root cause analysis can help transform a reactive culture (one that reacts to
problems) into a forward-looking culture (one that solves problems before they
occur or escalate). More importantly, RCA reduces the frequency of problems
occurring over time within the environment where the process is used.
9. Root cause analysis as a force for change is a threat to many cultures and en-
vironments. Threats to cultures are often met with resistance. Other forms of
management support may be required to achieve effectiveness and success with
root cause analysis. For example, a “non-punitive” policy toward problem iden-
tifiers may be required.
WT
General Process for Performing and Documenting an RCA-based
corrective Action
RCA (in steps 3, 4 and 5) forms the most critical part of successful corrective action,
directing the corrective action at the true root cause of the problem. Knowing the root
cause is secondary to the goal of prevention, as it is not possible to determine an abso-
lutely effective corrective action for the defined problem without knowing the root cause.
1. Define the problem or describe the event to prevent in the future. Include the
qualitative and quantitative attributes (properties) of the undesirable outcomes.
Usually this includes specifying the natures, the magnitudes, the locations, and
the timing of events. In some cases, “lowering the risks of reoccurrences” may
be a reasonable target. For example, “lowering the risks” of future automobile
accidents is certainly a more economically attainable goal than “preventing all”
future automobile accidents.
2. Gather data and evidence, classifying it along a timeline of events to the final
failure or crisis. For every behavior, condition, action and inaction, specify in
the “timeline” what should have been done when it differs from what was done.
3. In data mining Hierarchical Clustering models, use the clustering groups in-
stead of classifying: (a) peak the groups that exhibit the specific cause; (b) find
their upper-groups; (c) find group characteristics that are consistent; (d) check
with experts and validate.
4. Ask “why” and identify the causes associated with each sequential step towards
the defined problem or event. “Why” is taken to mean “What were the factors
that directly resulted in the effect?”
5. Classify causes into two categories: causal factors that relate to an event in the
sequence; and root causes that interrupted that step of the sequence chain when
eliminated.

6. Identify all other harmful factors that have equal or better claim to be called
“root causes”. If there are multiple root causes, which is often the case, reveal
those clearly for later optimum selection.
7. Identify corrective action(s) that will, with certainty, prevent recurrence of each
harmful effect and related outcomes or factors. Check that each corrective ac-
tion would, if pre-implemented before the event, have reduced or prevented
specific harmful effects.
8. Identify solutions that, when effective and with consensus agreement of the
group: prevent recurrence with reasonable certainty; are within the institution’s
control; meet its goals and objectives; and do not cause or introduce other new,
unforeseen problems.
9. Implement the recommended root cause correction(s).
WT
10. Ensure effectiveness by observing the implemented solutions in operation.
11. Identify other possibly useful methodologies for problem solving and problem
avoidance.
12. Identify and address the other instances of each harmful outcome and harmful
factor.
DMAIC
DMAIC (an acronym for Define, Measure, Analyze, Improve and Control) (pronounced
də-MAY-ick) refers to a data-driven improvement cycle used for improving, optimizing
and stabilizing business processes and designs. The DMAIC improvement cycle is the
core tool used to drive Six Sigma projects. However, DMAIC is not exclusive to Six Sig-
ma and can be used as the framework for other improvement applications.
Steps
DMAIC is an abbreviation of the five improvement steps it comprises: Define, Measure,
Analyze, Improve and Control. All of the DMAIC process steps are required and always
proceed in the given order.
The five steps of DMAIC

Define
The purpose of this step is to clearly articulate the business problem, goal, potential
resources, project scope and high-level project timeline. This information is typically
captured within project charter document. Write down what you currently know. Seek
to clarify facts, set objectives and form the project team. Define the following:
• A problem
• The customer(s)
• Voice of the customer (VOC) and Critical to Quality (CTQs) — what are the crit-
ical process outputs?
Measure
WT
The purpose of this step is to objectively establish current baselines as the basis for
improvement. This is a data collection step, the purpose of which is to establish process
performance baselines. The performance metric baseline(s) from the Measure phase
will be compared to the performance metric at the conclusion of the project to deter-
mine objectively whether significant improvement has been made. The team decides on
what should be measured and how to measure it. It is usual for teams to invest a lot of
effort into assessing the suitability of the proposed measurement systems. Good data is
at the heart of the DMAIC process:
Analyze
The purpose of this step is to identify, validate and select root cause for elimination.
A large number of potential root causes (process inputs, X) of the project problem are
identified via root cause analysis (for example a fishbone diagram). The top 3-4 poten-
tial root causes are selected using multi-voting or other consensus tool for further val-
idation. A data collection plan is created and data are collected to establish the relative
contribution of each root causes to the project metric, Y. This process is repeated until
“valid” root causes can be identified. Within Six Sigma, often complex analysis tools are
used. However, it is acceptable to use basic tools if these are appropriate. Of the “vali-
dated” root causes, all or some can be
• List and prioritize potential causes of the problem
• Prioritize the root causes (key process inputs) to pursue in the Improve step
• Identify how the process inputs (Xs) affect the process outputs (Ys). Data are
analyzed to understand the magnitude of contribution of each root cause, X,
to the project metric, Y. Statistical tests using p-values accompanied by Histo-
grams, Pareto charts, and line plots are often used to do this.

• Detailed process maps can be created to help pin-point where in the process the
root causes reside, and what might be contributing to the occurrence.
Improve
The purpose of this step is to identify, test and implement a solution to the problem;
in part or in whole. This depends on the situation. Identify creative solutions to elimi-
nate the key root causes in order to fix and prevent process problems. Use brainstorm-
ing or techniques like Six Thinking Hats and Random Word. Some projects can utilize
complex analysis tools like DOE (Design of Experiments), but try to focus on obvious
solutions if these are apparent. However, the purpose of this step can also be to find
solutions without implementing them.
• Create
WT
• Focus on the simplest and easiest solutions
• Test solutions using Plan-Do-Check-Act (PDCA) cycle
• Based on PDCA results, attempt to anticipate any avoidable risks associated

with the “improvement” using the Failure mode and effects analysis (FMEA)
• Create a detailed implementation plan
• Deploy improvements
Control
The purpose of this step is to sustain the gains. Monitor the improvements to ensure
continued and sustainable success. Create a control plan. Update records as required.
A Control chart can be useful during the Control stage to assess the stability of the im-
provements over time by serving as 1. a guide to continue monitoring the process and
2. provide a response plan for each of the measures being monitored in case the process
becomes unstable.
Replicate and thank the Teams

This is additional to the standard DMAIC steps but it should be considered. Think
about replicating the changes in other processes. Share your new knowledge with-
in and outside of your organization. It is very important to always provide posi-
tive morale support to team members in an effort to maximize the effectiveness of
DMAIC.
Replicating the improvements, sharing your success and thanking your team members
helps build buy-in for future DMAIC or improvement initiatives.

Additional Steps
Some organizations add a Recognize step at the beginning, which is to recognize the
right problem to work on, thus yielding an RDMAIC methodology.
Design for Six Sigma

Design for Six Sigma (DFSS) is a business-process management method related to tra-
ditional Six Sigma. It is used in many industries, like finance, marketing, basic engi-
neering, process industries, waste management, and electronics. It is based on the use
of statistical tools like linear regression and enables empirical research similar to that
performed in other fields, such as social science. While the tools and order used in Six
WT
Sigma require a process to be in place and functioning, DFSS has the objective of de-
termining the needs of customers and the business, and driving those needs into the
product solution so created. DFSS is relevant for relatively simple items / systems. It
is used for product or process design in contrast with process improvement. Measure-
ment is the most important part of most Six Sigma or DFSS tools, but whereas in Six
Sigma measurements are made from an existing process, DFSS focuses on gaining a
deep insight into customer needs and using these to inform every design decision and
trade-off.
There are different options for the implementation of DFSS. Unlike Six Sigma, which
is commonly driven via DMAIC (Define - Measure - Analyze - Improve - Control) proj-
ects, DFSS has spawned a number of stepwise processes, all in the style of the DMAIC
procedure.
DMADV, define – measure – analyze – design – verify, is sometimes synonymously

referred to as DFSS, although alternatives such as IDOV (Identify, Design, Optimize,
Verify) are also used. The traditional DMAIC Six Sigma process, as it is usually prac-
ticed, which is focused on evolutionary and continuous improvement manufacturing or
service process development, usually occurs after initial system or product design and
development have been largely completed. DMAIC Six Sigma as practiced is usually
consumed with solving existing manufacturing or service process problems and remov-
al of the defects and variation associated with defects. It is clear that manufacturing
variations may impact product reliability. So, a clear link should exist between reli-
ability engineering and Six Sigma (quality). In contrast, DFSS (or DMADV and IDOV)
strives to generate a new process where none existed, or where an existing process is
deemed to be inadequate and in need of replacement. DFSS aims to create a process
with the end in mind of optimally building the efficiencies of Six Sigma methodology
into the process before implementation; traditional Six Sigma seeks for continuous im-
provement after a process already exists.

DFSS as an Approach to Design

DFSS seeks to avoid manufacturing/service process problems by using advanced tech-
niques to avoid process problems at the outset (e.g., fire prevention). When combined,
these methods obtain the proper needs of the customer, and derive engineering system
parameter requirements that increase product and service effectiveness in the eyes of
the customer and all other people. This yields products and services that provide great
customer satisfaction and increased market share. These techniques also include tools
and processes to predict, model and simulate the product delivery system (the process-
es/tools, personnel and organization, training, facilities, and logistics to produce the
product/service). In this way, DFSS is closely related to operations research (solving
the knapsack problem), workflow balancing. DFSS is largely a design activity requiring
tools including: quality function deployment (QFD), axiomatic design, TRIZ, Design
for X, design of experiments (DOE), Taguchi methods, tolerance design, robustifica-
WT
tion and Response Surface Methodology for a single or multiple response optimization.
While these tools are sometimes used in the classic DMAIC Six Sigma process, they are
uniquely used by DFSS to analyze new and unprecedented products and processes. It
is a concurrent analyzes directed to manufacturing optimization related to the design.
Critics
Response surface methodology and other DFSS tools uses statistical (often empirical)
models, and therefore practitioners need to be aware that even the best statistical mod-
el is an approximation to reality. In practice, both the models and the parameter values
are unknown, and subject to uncertainty on top of ignorance. Of course, an estimated
optimum point need not be optimum in reality, because of the errors of the estimates
and of the inadequacies of the model.
Nonetheless, response surface methodology has an effective track-record of helping

researchers improve products and services: For example, George Box’s original re-
sponse-surface modeling enabled chemical engineers to improve a process that had
been stuck at a saddle-point for years.
Distinctions from DMAIC

Proponents of DMAIC, DDICA (Design Develop Initialize Control and Allocate) and
Lean techniques might claim that DFSS falls under the general rubric of Six Sigma or
Lean Six Sigma (LSS). Both methodologies focus on meeting customer needs and busi-
ness priorities as the starting-point for analysis.
It is often seen that the tools used for DFSS techniques vary widely from those used for
DMAIC Six Sigma. In particular, DMAIC, DDICA practitioners often use new or exist-
ing mechanical drawings and manufacturing process instructions as the originating
information to perform their analysis, while DFSS practitioners often use simulations

and parametric system design/analysis tools to predict both cost and performance of
candidate system architectures. While it can be claimed that two processes are similar,
in practice the working medium differs enough so that DFSS requires different tool
sets in order to perform its design tasks. DMAIC, IDOV and Six Sigma may still be used
during depth-first plunges into the system architecture analysis and for “back end” Six
Sigma processes; DFSS provides system design processes used in front-end complex
system designs. Back-front systems also are used. This makes 3.4 defects per million
design opportunities if done well.
Traditional six sigma methodology, DMAIC, has become a standard process optimi-
zation tool for the chemical process industries. However, it has become clear that the
promise of six sigma, specifically, 3.4 defects per million opportunities (DPMO), is sim-
ply unachievable after the fact. Consequently,there has been a growing movement to
implement six sigma design usually called design for six sigma DFSS and DDICA tools.
WT
This methodology begins with defining customer needs and leads to the development
of robust processes to deliver those needs.
Design for Six Sigma emerged from the Six Sigma and the Define-Measure-Analyze-Im-
prove-Control (DMAIC) quality methodologies, which were originally developed by
Motorola to systematically improve processes by eliminating defects. Unlike its tra-
ditional Six Sigma/DMAIC predecessors, which are usually focused on solving exist-
ing manufacturing issues (i.e., “fire fighting”), DFSS aims at avoiding manufacturing
problems by taking a more proactive approach to problem solving and engaging the
company efforts at an early stage to reduce problems that could occur (i.e., “fire pre-
vention”). The primary goal of DFSS is to achieve a significant reduction in the number
of nonconforming units and production variation. It starts from an understanding of
the customer expectations, needs and Critical to Quality issues (CTQs) before a design
can be completed. Typically in a DFSS program, only a small portion of the CTQs are
reliability-related (CTR), and therefore, reliability does not get center stage attention
in DFSS. DFSS rarely looks at the long-term (after manufacturing) issues that might
arise in the product (e.g. complex fatigue issues or electrical wear-out, chemical issues,
cascade effects of failures, system level interactions).
Similarities with other Methods

Arguments about what makes DFSS different from Six Sigma demonstrate the similar-
ities between DFSS and other established engineering practices such as probabilistic
design and design for quality. In general Six Sigma with its DMAIC roadmap focuses on
improvement of an existing process or processes. DFSS focuses on the creation of new
value with inputs from customers, suppliers and business needs. While traditional Six
Sigma may also use those inputs, the focus is again on improvement and not design of
some new product or system. It also shows the engineering background of DFSS. How-
ever, like other methods developed in engineering, there is no theoretical reason why
DFSS cannot be used in areas outside of engineering.

Software Engineering Applications

Historically, although the first successful Design for Six Sigma projects in 1989 and
1991 predate establishment of the DMAIC process improvement process, Design for
Six Sigma (DFSS) is accepted in part because Six Sigma organisations found that they
could not optimise products past three or four Sigma without fundamentally redesign-
ing the product, and because improving a process or product after launch is considered
less efficient and effective than designing in quality. ‘Six Sigma’ levels of performance
have to be ‘built-in’.
DFSS for software is essentially a non superficial modification of “classical DFSS” since
the character and nature of software is different from other fields of engineering. The
methodology describes the detailed process for successfully applying DFSS methods
and tools throughout the software product design, covering the overall Software De-
WT
velopment life cycle: requirements, architecture, design, implementation, integration,
optimization, verification and validation (RADIOV). The methodology explains how
to build predictive statistical models for software reliability and robustness and shows
how simulation and analysis techniques can be combined with structural design and
architecture methods to effectively produce software and information systems at Six
Sigma levels.
DFSS in software acts as a glue to blend the classical modelling techniques of software
engineering such as object-oriented design or Evolutionary Rapid Development with
statistical, predictive models and simulation techniques. The methodology provides
Software Engineers with practical tools for measuring and predicting the quality at-
tributes of the software product and also enables them to include software in system
reliability models.
Data mining and Predictive Analytics Application

Although many tools used in DFSS consulting such as response surface methodology,
transfer function via linear and non linear modeling, axiomatic design, simulation have
their origin in inferential statistics, statistical modeling may overlap with data analytics
and mining,
However, despite that DFSS as a methodology has been successfully used as an end-
to-end [technical project frameworks] for analytic and mining projects, this has been
observed by domain experts to be somewhat similar to the lines of CRISP-DM.
DFSS is claimed to be better suited for encapsulating and effectively handling higher
number of uncertainties including missing and uncertain data, both in terms of acute-
ness of definition and their absolute total numbers with respect to analytic s and da-
ta-mining tasks, six sigma approaches to data-mining are popularly known as DFSS
over CRISP [ CRISP- DM referring to data-mining application framework methodology
of SPSS].

With DFSS data mining projects have been observed to have considerably shortened
development life cycle . This is typically achieved by conducting data analysis to pre-de-
signed template match tests via a techno-functional approach using multilevel quality
function deployment on the data-set.
Practitioners claim that progressively complex KDD templates are created by multiple
DOE runs on simulated complex multivariate data, then the templates along with logs
are extensively documented via a decision tree based algorithm.
DFSS uses Quality Function Deployment and SIPOC for feature engineering of known
independent variables, thereby aiding in techno-functional computation of derived at-
tributes.
Once the predictive model has been computed, DFSS studies can also be used to provide
stronger probabilistic estimations of predictive model rank in a real world scenario.
WT
DFSS framework has been successfully applied for predictive analytics pertaining to
the HR analytics field, This application field has been considered to be traditionally
very challenging due to the peculiar complexities of predicting human behavior.
References
• De Feo, Joseph A.; Barnard, William (2005). JURAN Institute’s Six Sigma Breakthrough and
Beyond – Quality Performance Breakthrough Methods. Tata McGraw-Hill Publishing Company
Limited. ISBN 0-07-059881-9
• Ruffa, Stephen A. (2008). Going Lean: How the Best Companies Apply Lean Manufacturing Prin-
ciples to Shatter Uncertainty, Drive Innovation, and Maximize Profits. AMACOM (a division of
American Management Association). ISBN 0-8144-1057-X
• Richardson, Karen (7 January 2007). “The ‘Six Sigma’ Factor for Home Depot”. Wall Street Jour-
nal Online. Retrieved 2007-10-15
• Walshe, Kieran; Harvey, Gill; Jas, Pauline (15 November 2010). Connecting Knowledge and
Performance in Public Services: From Knowing to Doing. Cambridge University Press. p. 175.
ISBN 978-0-521-19546-1. Retrieved 2011-08-22
• Webber, Larry; Wallace, Michael (15 December 2006). Quality Control for Dummies. For Dum-
mies. pp. 42–43. ISBN 978-0-470-06909-7. Retrieved 2012-05-16
• Ficalora, Joe; Costello, Joe. “Wall Street Journal SBTI Rebuttal” (PDF). Sigma Breakthrough
Technologies, Inc. Retrieved 2007-10-15
• Hasenkamp, Torben; Ölme, Annika (2008). “Introducing Design for Six Sigma at SKF”. Inter-
national Journal of Six Sigma and Competitive Advantage. 4 (2): 172–189. doi:10.1504/IJSS-
CA.2008.020281
• Harry, Mikel J.; Mann, Prem S.; De Hodgins, Ofelia C.; Hulbert, Richard L.; Lacke, Christopher J.
(20 September 2011). Practitioner’s Guide to Statistics and Lean Six Sigma for Process Improve-
ments. John Wiley and Sons. pp. 30–. ISBN 978-1-118-21021-5. Retrieved 2011-11-15
• Ritchie, Scott A., et al. “Efficacy of novel updraft traps for collection of mosquitoes in Cairns,
Australia.” Journal of the American Mosquito Control Association Volume 24.4 (2008): 520-257

• Wheeler, Donald J. (2004). The Six Sigma Practitioner’s Guide to Data Analysis. SPC Press.
p. 307. ISBN 978-0-945320-62-3
• Keller, Paul A.; Keller, Paul (16 December 2010). Six Sigma Demystified. McGraw-Hill Profes-
sional. p. 40. ISBN 978-0-07-174679-3. Retrieved 2011-09-20
• Granchi, Thomas S., et al. “Patterns of Microbiology in Intra-abdominal Packing for Trauma.”
The Journal of TRAUMA Injury, Infection, and Critical Care Volume 56.1 (2004): 45-51
• Tennant, Geoff (2001). SIX SIGMA: SPC and TQM in Manufacturing and Services. Gower Pub-
lishing, Ltd. p. 25. ISBN 0-566-08374-4
• Webber, Larry; Wallace, Michael (15 December 2006). Quality Control for Dummies. For Dum-
mies. pp. 292–. ISBN 978-0-470-06909-7. Retrieved 2011-09-20
• Van Kaam, Anton H., MD, et al. “Automated versus Manual Oxygen Control with Different Satu-
ration Targets and Modes of Respiratory Support in Preterm Infants.” The Journal of Pediatrics
Volume 167.3 (2015): 545-550
WT
• Tennant, Geoff (2001). SIX SIGMA: SPC and TQM in Manufacturing and Services. Gower Pub-
lishing, Ltd. p. 6. ISBN 0-566-08374-4
• Coryea, R. Leroy; Cordy, Carl E.; Coryea, LeRoy R. (27 January 2006). Champion’s Practical Six
Sigma Summary. Xlibris Corporation. p. 65. ISBN 978-1-4134-9681-9. Retrieved 2011-09-20
• Glaser, Jordan, MD, et al. “Frequent Emergency Department Users with Human Immunodefi-
ciency Virus Infection.” The Journal of Emergency Medicine Volume 52.4 (2017): 585-586
• Pande, Peter S.; Neuman, Robert P.; Cavanagh, Roland R. (2001). The Six Sigma Way: How GE,
Motorola, and Other Top Companies are Honing Their Performance. New York: McGraw-Hill
Professional. p. 229. ISBN 0-07-135806-4
• Harry, Mikel J. (1988). The Nature of six sigma quality. Rolling Meadows, Illinois: Motorola Uni-
versity Press. p. 25. ISBN 978-1-56946-009-2
• Gygi, Craig; DeCarlo, Neil; Williams, Bruce (2005). Six Sigma for Dummies. Hoboken, NJ: Wiley
Publishing, Inc. pp. Front inside cover, 23. ISBN 0-7645-6798-5

5
Quality Management Tools and
Techniques
Quality management ensures consistency in an organization. It has four fundamental
components: quality assurance, quality control, quality planning and quality improve-
ment. The aspects elucidated in this chapter are of vital importance, and provide a
better understanding of quality management.
WT
Quality Management
Quality management ensures that an organization, product or service is consistent. It
has four main components: quality planning, quality assurance, quality control and
quality improvement. Quality management is focused not only on product and service
quality, but also on the means to achieve it. Quality management, therefore, uses qual-
ity assurance and control of processes as well as products to achieve more consistent
quality.
Evolution
Quality management is a recent phenomenon but important for an organization. Civ-
ilizations that supported the arts and crafts allowed clients to choose goods meeting
higher quality standards rather than normal goods. In societies where arts and crafts
are the responsibility of master craftsmen or artists, these masters would lead their
studios and train and supervise others. The importance of craftsmen diminished as
mass production and repetitive work practices were instituted. The aim was to produce
large numbers of the same goods. The first proponent in the US for this approach was
Eli Whitney who proposed (interchangeable) parts manufacture for muskets, hence
producing the identical components and creating a musket assembly line. The next
step forward was promoted by several people including Frederick Winslow Taylor, a
mechanical engineer who sought to improve industrial efficiency. He is sometimes
called “the father of scientific management.” He was one of the intellectual leaders of
the Efficiency Movement and part of his approach laid a further foundation for quality
management, including aspects like standardization and adopting improved practices.
Henry Ford was also important in bringing process and quality management practices
into operation in his assembly lines. In Germany, Karl Friedrich Benz, often called the

Quality Management Tools and Techniques 139
inventor of the motor car, was pursuing similar assembly and production practices,
although real mass production was properly initiated in Volkswagen after World War
II. From this period onwards, North American companies focused predominantly upon
production against lower cost with increased efficiency.
Walter A. Shewhart made a major step in the evolution towards quality management
by creating a method for quality control for production, using statistical methods, first
proposed in 1924. This became the foundation for his ongoing work on statistical qual-
ity control. W. Edwards Deming later applied statistical process control methods in
the United States during World War II, thereby successfully improving quality in the
manufacture of munitions and other strategically important products.
Quality leadership from a national perspective has changed over the past decades. After
the second world war, Japan decided to make quality improvement a national impera-
WT
tive as part of rebuilding their economy, and sought the help of Shewhart, Deming and
Juran, amongst others. W. Edwards Deming championed Shewhart’s ideas in Japan
from 1950 onwards. He is probably best known for his management philosophy estab-
lishing quality, productivity, and competitive position. He has formulated 14 points of
attention for managers, which are a high level abstraction of many of his deep insights.
They should be interpreted by learning and understanding the deeper insights. These
14 points include key concepts such as:
• Break down barriers between departments
• Management should learn their responsibilities, and take on leadership
• Supervision should be to help people and machines and gadgets to do a better
job
• Improve constantly and forever the system of production and service
• Institute a vigorous program of education and self-improvement
In the 1950s and 1960s, Japanese goods were synonymous with cheapness and low
quality, but over time their quality initiatives began to be successful, with Japan achiev-
ing high levels of quality in products from the 1970s onward. For example, Japanese
cars regularly top the J.D. Power customer satisfaction ratings. In the 1980s Dem-
ing was asked by Ford Motor Company to start a quality initiative after they realized
that they were falling behind Japanese manufacturers. A number of highly successful
quality initiatives have been invented by the Japanese. Many of the methods not only
provide techniques but also have associated quality culture (i.e. people factors). These
methods are now adopted by the same western countries that decades earlier derided
Japanese methods.
Customers recognize that quality is an important attribute in products and services.
Suppliers recognize that quality can be an important differentiator between their own offer-
ings and those of competitors (quality differentiation is also called the quality gap). In the

past two decades this quality gap has been greatly reduced between competitive products
and services. This is partly due to the contracting (also called outsourcing) of manufacture
to countries like India and China, as well internationalization of trade and competition.
These countries amongst many others have raised their own standards of quality in order
to meet International standards and customer demands. The ISO 9000 series of standards
are probably the best known International standards for quality management.
Customer satisfaction is the backbone of Quality Management. Setting up a million

dollar company without taking care of needs of customer will ultimately decrease its
revenue.
There is a huge number of books available on quality management. Some themes have
become more significant including quality culture, the importance of knowledge man-
agement, and the role of leadership in promoting and achieving high quality. Disci-
WT
plines like systems thinking are bringing more holistic approaches to quality so that
people, process and products are considered together rather than independent factors
in quality management.
The influence of quality thinking has spread to non-traditional applications outside
of walls of manufacturing, extending into service sectors and into areas such as sales,
marketing and customer service.
Principles
The International Standard for Quality management (ISO 9001:2015) adopts a number
of management principles, that can be used by top management to guide their organi-
zations towards improved performance.
Customer Focus
The primary focus of quality management is to meet customer requirements and to
strive to exceed customer expectations.
Rationale
Sustained success is achieved when an organization attracts and retains the confidence
of customers and other interested parties on whom it depends. Every aspect of custom-
er interaction provides an opportunity to create more value for the customer. Under-
standing current and future needs of customers and other interested parties contrib-
utes to sustained success of an organization.
Leadership
Leaders at all levels establish unity of purpose and direction and create conditions in
which people are engaged in achieving the organization’s quality objectives.

Rationale
Creation of unity of purpose and direction and engagement of people enable an organi-
zation to align its strategies, policies, processes and resources to achieve its objectives.
Engagement of People
Competent, empowered and engaged people at all levels throughout the organization
are essential to enhance its capability to create and deliver value.
Rationale
To manage an organization effectively and efficiently, it is important to involve all peo-
ple at all levels and to respect them as individuals. Recognition, empowerment and
WT
enhancement of competence facilitate the engagement of people in achieving the orga-
nization’s quality objectives.
Process Approach
Consistent and predictable results are achieved more effectively and efficiently when
activities are understood and managed as interrelated processes that function as a co-
herent system.
Rationale
The quality management system consists of interrelated processes. Understanding how
results are produced by this system enables an organization to optimize the system and
its performance.
Improvement
Successful organizations have an ongoing focus on improvement.
Rationale
Improvement is essential for an organization to maintain current levels of perfor-
mance, to react to changes in its internal and external conditions and to create new
opportunities.
Evidence based Decision Making

Decisions based on the analysis and evaluation of data and information are more likely
to produce desired results.
Rationale
Decision making can be a complex process, and it always involves some uncertainty.

It often involves multiple types and sources of inputs, as well as their interpretation,
which can be subjective. It is important to understand cause-and-effect relationships
and potential unintended consequences. Facts, evidence and data analysis lead to
greater objectivity and confidence in decision making.
Relationship Management
For sustained success, an organization manages its relationships with interested par-
ties, such as suppliers, retailers.
Rationale
Interested parties influence the performance of an organization. Sustained success is
more likely to be achieved when the organization manages relationships with all of its
WT
interested parties to optimize their impact on its performance. Relationship manage-
ment with its supplier and partner networks is of particular importance.
Quality Improvement and more
The PDCA cycle
There are many methods for quality improvement. These cover product improvement,
process improvement and people based improvement. In the following list are meth-
ods of quality management and techniques that incorporate and drive quality improve-
ment:
1. ISO 9004:2008 — guidelines for performance improvement.
2. ISO 9001:2015 - a certified quality management system (QMS) for organisa-

tions who want to prove their ability to consistently provide products and ser-
vices that meet the needs of their customers and other relevant stakeholders.
3. ISO 15504-4: 2005 — information technology — process assessment — Part 4:

Guidance on use for process improvement and process capability determina-
tion.

4. QFD — quality function deployment, also known as the house of quality ap-
proach.
5. Kaizen — Japanese for change for the better; the common English term is con-
tinuous improvement.
6. Zero Defect Program — created by NEC Corporation of Japan, based upon sta-
tistical process control and one of the inputs for the inventors of Six Sigma.
7. Six Sigma — 6σ, Six Sigma combines established methods such as statistical
process control, design of experiments and failure mode and effects analysis
(FMEA) in an overall framework.
8. PDCA — plan, do, check, act cycle for quality control purposes. (Six Sigma’s
DMAIC method (define, measure, analyze, improve, control) may be viewed as
WT
a particular implementation of this.)
9. Quality circle — a group (people oriented) approach to improvement.
10. Taguchi methods — statistical oriented methods including quality robustness,

quality loss function, and target specifications.
11. The Toyota Production System — reworked in the west into lean manufacturing.
12. Kansei Engineering — an approach that focuses on capturing customer emo-

tional feedback about products to drive improvement.
13. TQM — total quality management is a management strategy aimed at embed-

ding awareness of quality in all organizational processes. First promoted in
Japan with the Deming prize which was adopted and adapted in USA as the
Malcolm Baldrige National Quality Award and in Europe as the European
Foundation for Quality Management award (each with their own variations).
14. TRIZ — meaning “theory of inventive problem solving”
15. BPR — business process reengineering, a management approach aiming at op-

timizing the workflows and processes within an organisation.
16. OQRM — Object-oriented Quality and Risk Management, a model for quality
and risk management.
17. Top Down & Bottom Up Approaches—Leadership approaches to change
Proponents of each approach have sought to improve them as well as apply them for
small, medium and large gains. Simple one is Process Approach, which forms the basis
of ISO 9001:2008 Quality Management System standard, duly driven from the ‘Eight
principles of Quality management’, process approach being one of them. Thareja writes
about the mechanism and benefits: “The process (proficiency) may be limited in words,

but not in its applicability. While it fulfills the criteria of all-round gains: in terms of
the competencies augmented by the participants; the organisation seeks newer direc-
tions to the business success, the individual brand image of both the people and the
organisation, in turn, goes up. The competencies which were hitherto rated as being
smaller, are better recognized and now acclaimed to be more potent and fruitful”. The
more complex Quality improvement tools are tailored for enterprise types not original-
ly targeted. For example, Six Sigma was designed for manufacturing but has spread to
service enterprises. Each of these approaches and methods has met with success but
also with failures.
Some of the common differentiators between success and failure include commitment,
knowledge and expertise to guide improvement, scope of change/improvement de-
sired (Big Bang type changes tend to fail more often compared to smaller changes) and
adaption to enterprise cultures. For example, quality circles do not work well in every
WT
enterprise (and are even discouraged by some managers), and relatively few TQM-par-
ticipating enterprises have won the national quality awards.
There have been well publicized failures of BPR, as well as Six Sigma. Enterprises
therefore need to consider carefully which quality improvement methods to adopt, and
certainly should not adopt all those listed here.
It is important not to underestimate the people factors, such as culture, in selecting a

quality improvement approach. Any improvement (change) takes time to implement,
gain acceptance and stabilize as accepted practice. Improvement must allow pauses be-
tween implementing new changes so that the change is stabilized and assessed as a real
improvement, before the next improvement is made (hence continual improvement,
not continuous improvement).
Improvements that change the culture take longer as they have to overcome greater
resistance to change. It is easier and often more effective to work within the existing
cultural boundaries and make small improvements (that is Kaizen) than to make major
transformational changes. Use of Kaizen in Japan was a major reason for the creation
of Japanese industrial and economic strength.
On the other hand, transformational change works best when an enterprise faces a cri-
sis and needs to make major changes in order to survive. In Japan, the land of Kaizen,
Carlos Ghosn led a transformational change at Nissan Motor Company which was in a
financial and operational crisis. Well organized quality improvement programs take all
these factors into account when selecting the quality improvement methods.
Quality Standards
ISO Standards
The International Organization for Standardization (ISO) created the Quality Man-

agement System (QMS) standards in 1987. They were the ISO 9000:1987 series of
standards comprising ISO 9001:1987, ISO 9002:1987 and ISO 9003:1987; which were
applicable in different types of industries, based on the type of activity or process: de-
signing, production or service delivery.
The standards are reviewed every few years by the International Organization for Stan-
dardization. The version in 1994 was called the ISO 9000:1994 series; consisting of the
ISO 9001:1994, 9002:1994 and 9003:1994 versions.
The last major revision was in the year 2008 and the series was called ISO 9000:2000
series. The ISO 9002 and 9003 standards were integrated into one single certifiable
standard: ISO 9001:2000. After December 2003, organizations holding ISO 9002 or
9003 standards had to complete a transition to the new standard.
ISO released a minor revision, ISO 9001:2008 on 14 October 2008. It contains no new
WT
requirements. Many of the changes were to improve consistency in grammar, facilitat-
ing translation of the standard into other languages for use by over 950,000 certified
organization in the 175 countries (as at Dec 2007) that use the standard.
The ISO 9004:2009 document gives guidelines for performance improvement over
and above the basic standard (ISO 9001:2000). This standard provides a measurement
framework for improved quality management, similar to and based upon the measure-
ment framework for process assessment.
The Quality Management System standards created by ISO are meant to certify the
processes and the system of an organization, not the product or service itself. ISO 9000
standards do not certify the quality of the product or service.
In 2005 the International Organization for Standardization released a standard, ISO

22000, meant for the food industry. This standard covers the values and principles of
ISO 9000 and the HACCP standards. It gives one single integrated standard for the
food industry and is expected to become more popular in the coming years in such
industry.
ISO has also released standards for other industries. For example, Technical Standard
TS 16949 defines requirements in addition to those in ISO 9001:2008 specifically for
the automotive industry.
ISO has a number of standards that support quality management. One group describes
processes (including ISO/IEC 12207 and ISO/IEC 15288) and another describes pro-
cess assessment and improvement ISO 15504.
CMMI and IDEAL Methods

The Software Engineering Institute has its own process assessment and improvement
methods, called CMMI (Capability Maturity Model Integration) and IDEAL respectively.

Capability Maturity Model Integration (CMMI) is a process improvement training and

appraisal program and service administered and marketed by Carnegie Mellon Univer-
sity and required by many DOD and U.S. Government contracts, especially in software
development. Carnegie Mellon University claims CMMI can be used to guide process
improvement across a project, division, or an entire organization. Under the CMMI
methodology, processes are rated according to their maturity levels, which are defined
as: Initial, Managed, Defined, Quantitatively Managed, Optimizing. Currently support-
ed is CMMI Version 1.3. CMMI is registered in the U.S. Patent and Trademark Office
by Carnegie Mellon University.
Three constellations of CMMI are:
• Product and service development (CMMI for Development)
• Service establishment, management, and delivery (CMMI for Services)
WT
• Product and service acquisition (CMMI for Acquisition).
CMMI Version 1.3 was released on November 1, 2010. This release is noteworthy be-
cause it updates all three CMMI models (CMMI for Development, CMMI for Services,
and CMMI for Acquisition) to make them consistent and to improve their high matu-
rity practices. The CMMI Product Team has reviewed more than 1,150 change requests
for the models and 850 for the appraisal method.
As part of its mission to transition mature technology to the software community,

the SEI has transferred CMMI-related products and activities to the CMMI Institute,
a 100%-controlled subsidiary of Carnegie Innovations, Carnegie Mellon University’s
technology commercialization enterprise.
Other Quality Management Information

• VDA: Organisation developed for the German automobile industry VDA
• AVSQ: Organisation developed for the Italian automobile industry AVSQ
• EAQF: Organisation developed for the French automobile industry EAQF
• QS-9000: Standard developed for the US automobile industry QS9000
• ISO 19011 Standard developed for auditing a management system (internation-
al) ISO 19011
Awards
• EFQM Excellence Award (Formerly the European Quality-Award: European
award for Total Quality Management and organizational excellence which has
been presented since 1991 by the European Foundation for Quality Manage-

ment (EFQM). Similar awards are presented by the EFQM’s National Partner
organisations across Europe. For example, in the UK the British Quality Foun-
dation (BQF) run the UK Excellence Awards. These awards are based on the
EFQM Excellence Model, an organizational framework.
• Deming-Award: Japanese award for Quality management since 1951.
• Malcolm Baldrige National Quality Award: US-American Award for perfor-

mance excellence created in 1987.
Quality Management Software

Quality Management Software is a category of technologies used by organizations
to manage the delivery of high quality products. Solutions range in functionality,
however, with the use of automation capabilities they typically have components
WT
for managing internal and external risk, compliance, and the quality of processes
and products. Pre-configured and industry-specific solutions are available and gen-
erally require integration with existing IT architecture applications such as ERP,
SCM, CRM, and PLM.
Quality Management Software Functionalities

• Non-Conformances/Corrective and Preventive Action
• Compliance/Audit Management
• Supplier Quality Management
• Risk Management
• Statistical Process Control
• Failure Mode and Effects Analysis
• Complaint Handling
• Advanced Product Quality Planning
• Environment, Health, and Safety
• Hazard Analysis & Critical Control Points
• Production Part Approval Process
Enterprise Quality Management Software

The intersection of technology and quality management software prompted the
emergence of a new software category: Enterprise Quality Management Software

(EQMS). EQMS is a platform for cross-functional communication and collaboration

that centralizes, standardizes, and streamlines quality management data from across
the value chain. The software breaks down functional silos created by traditionally
implemented standalone and targeted solutions. Supporting the proliferation and ac-
cessibility of information across supply chain activities, design, production, distribu-
tion, and service, it provides a holistic viewpoint for managing the quality of products
and processes.
Quality Terms
• Quality Improvement can be distinguished from Quality Control in that Quality
Improvement is the purposeful change of a process to improve the reliability of
achieving an outcome.
WT
• Quality Control is the ongoing effort to maintain the integrity of a process to
maintain the reliability of achieving an outcome.
• Quality Assurance is the planned or systematic actions necessary to provide

enough confidence that a product or service will satisfy the given requirements.
Academic Resources
• International Journal of Productivity and Quality Management, ISSN 1746-
6474, Inderscience
• International Journal of Quality & Reliability Management, ISSN 0265-671X,

Emerald Publishing Group
• Qualität und Zuverlässigkeit, ISSN 0720-1214, Carl Hanser Verlag (Germany)
Quality Management System

A quality management system (QMS) is a collection of business processes focused on
consistently meeting customer requirements and enhancing their satisfaction. It is
aligned with an organization’s purpose and strategic direction (ISO9001:2015). It is
expressed as the organizational goals and aspirations, policies, processes, documented
information and resources needed to implement and maintain it. Early quality manage-
ment systems emphasized predictable outcomes of an industrial product production
line, using simple statistics and random sampling. By the 20th century, labor inputs
were typically the most costly inputs in most industrialized societies, so focus shift-
ed to team cooperation and dynamics, especially the early signaling of problems via a
continuous improvement cycle. In the 21st century, QMS has tended to converge with
sustainability and transparency initiatives, as both investor and customer satisfaction

and perceived quality is increasingly tied to these factors. Of QMS regimes, the ISO
9000 family of standards is probably the most widely implemented worldwide – the
ISO 19011 audit regime applies to both, and deals with quality and sustainability and
their integration.
Other QMS, e.g. Natural Step, focus on sustainability issues and assume that other
quality problems will be reduced as result of the systematic thinking, transparency,
documentation and diagnostic discipline.
The term “Quality Management System” and the acronym “QMS” were invented in
1991 by Ken Croucher, a British management consultant working on designing and
implementing a generic model of a QMS within the IT industry.
Elements
WT
1. Quality policy
2. Quality objectives
3. Quality manual
4. Organizational structure and responsibilities
5. Data management
6. Processes – including purchasing
7. Product quality leading to customer satisfaction
8. Continuous improvement including corrective and preventive action
9. Quality instruments
10. Document control
Concept of Quality – historical Background

The concept of quality as we think of it now first emerged from the Industrial Revolu-
tion. Previously goods had been made from start to finish by the same person or team
of people, with handcrafting and tweaking the product to meet ‘quality criteria’. Mass
production brought huge teams of people together to work on specific stages of produc-
tion where one person would not necessarily complete a product from start to finish.
In the late 19th century pioneers such as Frederick Winslow Taylor and Henry Ford
recognized the limitations of the methods being used in mass production at the time
and the subsequent varying quality of output. Birland established Quality Departments
to oversee the quality of production and rectifying of errors, and Ford emphasized stan-
dardization of design and component standards to ensure a standard product was pro-

duced. Management of quality was the responsibility of the Quality department and
was implemented by Inspection of product output to ‘catch’ defects.
Application of statistical control came later as a result of World War production meth-
ods, which were advanced by the work done of W. Edwards Deming, a statistician,
after whom the Deming Prize for quality is named. Joseph M. Juran focused more on
managing for quality. The first edition of Juran’s Quality Control Handbook was pub-
lished in 1951. He also developed the “Juran’s trilogy”, an approach to cross-functional
management that is composed of three managerial processes: quality planning, quality
control, and quality improvement. These functions all play a vital role when evaluating
quality.
Quality, as a profession and the managerial process associated with the quality func-
tion, was introduced during the second half of the 20th century and has evolved since
WT
then. Over this period, few other disciplines have seen as many changes as the quality
profession.
The quality profession grew from simple control to engineering, to systems engineering.
Quality control activities were predominant in the 1940s, 1950s, and 1960s. The 1970s
were an era of quality engineering and the 1990s saw quality systems as an emerging
field. Like medicine, accounting, and engineering, quality has achieved status as a rec-
ognized profession.
As Lee and Dale (1998) state, there are many organizations that are striving to assess
the methods and ways in which their overall productivity, the quality of their products
and services and the required operations to achieve them are done.
Medical Devices
The two primary, state of the art, guidelines for medical device manufacturer QMS and
related services today are the ISO 13485 standards and the US FDA 21 CFR 820 regula-
tions. The two have a great deal of similarity, and many manufacturers adopt QMS that
is compliant with both guidelines.
ISO 13485 are harmonized with the European Union medical devices directive (93/42/
EEC) as well as the IVD and AIMD directives. The ISO standard is also incorporated in
regulations for other jurisdictions such as Japan (JPAL) and Canada (CMDCAS).
Quality System requirements for medical devices have been internationally recog-
nized as a way to assure product safety and efficacy and customer satisfaction since at
least 1983 and were instituted as requirements in a final rule published on October 7,
1996. The U.S. Food and Drug Administration (FDA) had documented design defects
in medical devices that contributed to recalls from 1983 to 1989 that would have been
prevented if Quality Systems had been in place. The rule is promulgated at 21 CFR
820.

According to current Good Manufacturing Practice (GMP), medical device manufac-

turers have the responsibility to use good judgment when developing their quality sys-
tem and apply those sections of the FDA Quality System (QS) Regulation that are ap-
plicable to their specific products and operations, in Part 820 of the QS regulation. As
with GMP, operating within this flexibility, it is the responsibility of each manufacturer
to establish requirements for each type or family of devices that will result in devices
that are safe and effective, and to establish methods and procedures to design, produce,
and distribute devices that meet the quality system requirements.
The FDA has identified in the QS regulation the 7 essential subsystems of a quality sys-
tem. These subsystems include:
•
WT
Management controls;
Design controls;
Production and process controls
Quality system
Corrective and preventative actions

Material controls
Records, documents, and change controls
• Facilities and equipment controls
all overseen by management and quality audits.
Because the QS regulation covers a broad spectrum of devices and production process-
es, it allows some leeway in the details of quality system elements. It is left to man-
ufacturers to determine the necessity for, or extent of, some quality elements and to
develop and implement procedures tailored to their particular processes and devices.
For example, if it is impossible to mix up labels at a manufacturer because there is only
one label to each product, then there is no necessity for the manufacturer to comply
with all of the GMP requirements under device labeling.
Drug manufactures are regulated under a different section of the Code of Federal Reg-
ulations:

Organizations and Awards

The International Organization for Standardization’s ISO 9001:2008 series describes
standards for a QMS addressing the principles and processes surrounding the design,
development, and delivery of a general product or service. Organizations can partici-
pate in a continuing certification process to ISO 9001:2008 to demonstrate their com-
pliance with the standard, which includes a requirement for continual (i.e. planned)
improvement of the QMS, as well as more foundational QMS components such as fail-
ure mode and effects analysis (FMEA).
(ISO 9000:2005 provides information on the fundamentals and vocabulary used in

quality management systems. ISO 9004:2009 provides guidance on quality manage-
ment approach for the sustained success of an organization. Neither of these standards
can be used for certification purposes as they provide guidance, not requirements).
WT
The Baldrige Performance Excellence Program educates organizations in improving
their performance and administers the Malcolm Baldrige National Quality Award. The
Baldrige Award recognizes U.S. organizations for performance excellence based on the
Baldrige Criteria for Performance Excellence. The Criteria address critical aspects of
management that contribute to performance excellence: leadership; strategy; custom-
ers; measurement, analysis, and knowledge management; workforce; operations; and
results.
The European Foundation for Quality Management’s EFQM Excellence Model sup-
ports an award scheme similar to the Baldrige Award for European companies.
In Canada, the National Quality Institute presents the ‘Canada Awards for Excellence’
on an annual basis to organizations that have displayed outstanding performance in
the areas of Quality and Workplace Wellness, and have met the Institute’s criteria with
documented overall achievements and results.
The European Quality in Social Service (EQUASS) is a sector-specific quality system de-
signed for the social services sector and addresses quality principles that are specific to ser-
vice delivery to vulnerable groups, such as empowerment, rights, and person-centredness.
The Alliance for Performance Excellence is a network of state and local organizations
that use the Baldrige Criteria for Performance Excellence at the grassroots level to im-
prove the performance of local organizations and economies. browsers can find Al-
liance members in their state and get the latest news and events from the Baldrige
community.
Process
A QMS process is an element of an organizational QMS. The ISO9001:2000 stan-
dard requires organizations seeking compliance or certification to define the process-

es which form the QMS and the sequence and interaction of these processes. Butter-
worth-Heinemann and other publishers have offered several books which provide
step-by-step guides to those seeking the quality certifications of their products.
Examples of such processes include:

• order processes,
• production plans,
• product/ service/ process measurements to comply with specific requirements
e.g. statistical process control and measurement systems analysis,
• calibrations,
• internal audits,
WT
• corrective actions,
• preventive actions,
• identification, labeling and control of non-conforming products to prevent its
inadvertent use, delivery or processing,
• purchasing and related processes such as supplier selection and monitoring
ISO9001 requires that the performance of these processes be measured, analyzed and
continually improved, and the results of this form an input into the management re-
view process.
ISO 9000
The ISO 9000 family of quality management systems standards is designed to help or-
ganizations ensure that they meet the needs of customers and other stakeholders while
meeting statutory and regulatory requirements related to a product or program. ISO
9000 deals with the fundamentals of quality management systems, including the seven
quality management principles upon which the family of standards is based. ISO 9001
deals with the requirements that organizations wishing to meet the standard must ful-
fill.
Third-party certification bodies provide independent confirmation that organizations

meet the requirements of ISO 9001. Over one million organizations worldwide are in-
dependently certified, making ISO 9001 one of the most widely used management tools
in the world today. However, the ISO certification process has been criticized as being
wasteful and not being useful for all organizations.
Background
ISO 9000 was first published in 1987 by ISO (International Organization for Standard-

ization). It was based on the BS 5750 series of standards from BSI that were proposed
to ISO in 1979. However, its history can be traced back some twenty years before that,
to the publication of the United States Department of Defense MIL-Q-9858 standard in
1959. MIL-Q-9858 was revised into the NATO AQAP series of standards in 1969, which
in turn were revised into the BS 5179 series of guidance standards published in 1974,
and finally revised into the BS 5750 series of requirements standards in 1979 before
being submitted to ISO.
Reasons for Use

The global adoption of ISO 9001 may be attributable to a number of factors. A number
of major purchasers require their suppliers to hold ISO 9001 certification. In addition
to several stakeholders’ benefits, a number of studies have identified significant finan-
cial benefits for organizations certified to ISO 9001, with a 2011 survey from the British
WT
Assessment Bureau showing 44% of their certified clients had won new business. Cor-
bett et al. showed that certified organizations achieved superior return on assets com-
pared to otherwise similar organizations without certification. Heras et al. found simi-
larly superior performance and demonstrated that this was statistically significant and
not a function of organization size. Naveha and Marcus claimed that implementing ISO
9001 led to superior operational performance in the U.S. automotive industry. Sharma
identified similar improvements in operating performance and linked this to superior
financial performance. Chow-Chua et al. showed better overall financial performance
was achieved for companies in Denmark. Rajan and Tamimi (2003) showed that ISO
9001 certification resulted in superior stock market performance and suggested that
shareholders were richly rewarded for the investment in an ISO 9001 system.
While the connection between superior financial performance and ISO 9001 may be
seen from the examples cited, there remains no proof of direct causation, though lon-
gitudinal studies, such as those of Corbett et al. (2005) may suggest it. Other writers,
such as Heras et al. (2002), have suggested that while there is some evidence of this,
the improvement is partly driven by the fact that there is a tendency for better perform-
ing companies to seek ISO 9001 certification.
The mechanism for improving results has also been the subject of much research. Lo
et al. (2007) identified operational improvements (e.g., cycle time reduction, inventory
reductions) as following from certification. Internal process improvements in organi-
zations lead to externally observable improvements. The benefit of increased interna-
tional trade and domestic market share, in addition to the internal benefits such as
customer satisfaction, interdepartmental communications, work processes, and cus-
tomer/supplier partnerships derived, far exceeds any and all initial investment.
Global Adoption
The increase in ISO 9001 certification is shown in the tables below.

Worldwide total of ISO 9001 certificates (end of each year)

2000 2001 2002 2003 2004 2005 2006 2007
409,421 510,616 561,747 567,985 660,132 773,867 896,929 951,486
2008 2009 2010 2011 2012 2013 2014
982,832 1,064,785 1,118,510 1,111,698 1,096,987 1,126,460 1,138,155
Top 10 countries for ISO 9001 certificates (2014)

Rank Country No. of certificates
1 China 342,800
2 Italy 168,960
3 Germany 55,363
4 Japan 45,785
5 India 41,016
WT
6 United Kingdom 40,200
7 Spain 36,005
8 United States 33,008
9 France 29,122
10 Australia 19,731

1 China 297,037
2 Italy 138,892
3 Russian Federation 62,265
4 Spain 59,854
5 Japan 59,287
6 Germany 50,583
8 India 33,250
10 Korea, Republic of 24,778

1 China 257,076
2 Italy 130,066
3 Japan 68,484
4 Spain 59,576
5 Russian Federation 53,152
6 Germany 47,156


8 India 37,493
10 Korea, Republic of 23,400
ISO 9000 series Quality Management Principles

The ISO 9000 series are based on seven quality management principles (QMP)
The seven quality management principles are:

• QMP 1 – Customer focus
• QMP 2 – Leadership
WT
• QMP 3 – Engagement of people
• QMP 4 – Process approach
• QMP 5 – Improvement
• QMP 6 – Evidence-based decision making
• QMP 7 – Relationship management
Principle 1 – Customer focus
Organizations depend on their customers and therefore should understand cur-
rent and future customer needs, should meet customer requirements and strive
to exceed customer expectations.
Principle 2 – Leadership
Leaders establish unity of purpose and direction of the organization. They
should create and maintain the internal environment in which people can be-
come fully involved in achieving the organization’s objectives.
Principle 3 – Engagement of people
People at all levels are the essence of an organization and their full involvement
enables their abilities to be used for the organization’s benefit.
Principle 4 – Process approach
A desired result is achieved more efficiently when activities and related resourc-
es are managed as a process.
Principle 5 – Improvement
Improvement of the organization’s overall performance should be a permanent

objective of the organization.

Principle 6 – Evidence-based decision making

Effective decisions are based on the analysis of data and information.
Principle 7 – Relationship management
An organization and its external providers (suppliers, contractors, service pro-
viders) are interdependent and a mutually beneficial relationship enhances the
ability of both to create value.
Contents of ISO 9001:2015
WT
A fish wholesaler in Tsukiji, Japan advertising its ISO 9001 certification.
ISO 9001:2015 Quality management systems — Requirements is a document of approx-

imately 30 pages which is available from the national standards organization in each
country. Only ISO 9001 is directly audited against for third party assessment purposes.
Contents of ISO 9001:2015 are as follows:

• Section 1: Scope
• Section 2: Normative references
• Section 3: Terms and definitions
• Section 4: Context of the organization
• Section 5: Leadership
• Section 6: Planning
• Section 7: Support
• Section 8: Operation
• Section 9: Performance evaluation
• Section 10: Improvement

Essentially the layout of the standard is similar to the previous ISO 9001:2008 stan-
dard in that it follows the Plan, Do, Check, Act cycle in a process based approach, but
is now further encouraging this to have risk based thinking. (section 0.3.3 of the intro-
duction) The purpose of the quality objectives is to determine the conformity of the re-
quirements (customers and organizations), facilitate effective deployment and improve
the quality management system.
Before the certification body can issue or renew a certificate, the auditor must be satis-
fied that the company being assessed has implemented the requirements of sections 4
to 10. Sections 1 to 3 are not directly audited against, but because they provide context
and definitions for the rest of the standard, not that of the organization, their contents
must be taken into account.
The standard no longer specifies that the organization shall issue and maintain doc-
WT
umented procedures, however ISO 9001:2015 requires the organization to document
any other procedures required for its effective operation. The standard also requires the
organization to issue and communicate a documented quality policy, a Quality Manual
(which may or may not include documented procedures) and numerous records, as
specified throughout the standard. New for the 2015 release is a requirement for an
organization to assess risks and opportunities (section 6.1) and to determine internal
and external issues relevant to its purpose and strategic direction (section 4.1). The
organization must demonstrate how the standard’s requirements are being met, while
the external auditor’s role is to determine the quality management system’s effective-
ness. More detailed interpretation and implementation examples are often sought by
organizations seeking more information in what can be a very technical area.
Certification
International Organization for Standardization (ISO) does not certify organizations it-
self. Numerous certification bodies exist, which audit organizations and, upon success,
issue ISO 9001 compliance certificates. Although commonly referred to as “ISO 9000”
certification, the actual standard to which an organization’s quality management sys-
tem can be certified is ISO 9001:2015 (ISO 9001:2008 will expire by around September
2018). Many countries have formed accreditation bodies to authorize (“accredit”) the
certification bodies. Both the accreditation bodies and the certification bodies charge fees
for their services. The various accreditation bodies have mutual agreements with each
other to ensure that certificates issued by one of the accredited certification bodies (CB)
are accepted worldwide. Certification bodies themselves operate under another quality
standard, ISO/IEC 17021, while accreditation bodies operate under ISO/IEC 17011.
An organization applying for ISO 9001 certification is audited based on an extensive

sample of its sites, functions, products, services and processes. The auditor presents
a list of problems (defined as “nonconformities”, “observations”, or “opportunities for
improvement”) to management. If there are no major nonconformities, the certifica-

tion body will issue a certificate. Where major nonconformities are identified, the or-
ganization will present an improvement plan to the certification body (e.g., corrective
action reports showing how the problems will be resolved); once the certification body
is satisfied that the organization has carried out sufficient corrective action, it will issue
a certificate. The certificate is limited by a certain scope (e.g., production of golf balls)
and will display the addresses to which the certificate refers.
An ISO 9001 certificate is not a once-and-for-all award, but must be renewed at regular
intervals recommended by the certification body, usually once every three years. There
are no grades of competence within ISO 9001: either a company is certified (meaning
that it is committed to the method and model of quality management described in the
standard) or it is not. In this respect, ISO 9001 certification contrasts with measure-
ment-based quality systems.
WT
Evolution of ISO 9000 Standards
The ISO 9000 standard is continually being revised by standing technical committees
and advisory groups, who receive feedback from those professionals who are imple-
menting the standard.
1987 Version
ISO 9000:1987 had the same structure as the UK Standard BS 5750, with three “mod-
els” for quality management systems, the selection of which was based on the scope of
activities of the organization:
• ISO 9001:1987 Model for quality assurance in design, development, produc-
tion, installation, and servicing was for companies and organizations whose
activities included the creation of new products.
• ISO 9002:1987 Model for quality assurance in production, installation, and
servicing had basically the same material as ISO 9001 but without covering the
creation of new products.
• ISO 9003:1987 Model for quality assurance in final inspection and test cov-
ered only the final inspection of finished product, with no concern for how the
product was produced.
ISO 9000:1987 was also influenced by existing U.S. and other Defense Standards (“MIL
SPECS”), and so was well-suited to manufacturing. The emphasis tended to be placed
on conformance with procedures rather than the overall process of management, which
was likely the actual intent.
1994 version
ISO 9000:1994 emphasized quality assurance via preventive actions, instead of just

checking final product, and continued to require evidence of compliance with docu-
mented procedures. As with the first edition, the down-side was that companies tended
to implement its requirements by creating shelf-loads of procedure manuals, and be-
coming burdened with an ISO bureaucracy. In some companies, adapting and improv-
ing processes could actually be impeded by the quality system.
2000 Version
ISO 9001:2000 replaced all three former standards of 1994 issue, ISO 9001, ISO 9002
and ISO 9003. Design and development procedures were required only if a company
does in fact engage in the creation of new products. The 2000 version sought to make
a radical change in thinking by actually placing front and centre the concept of pro-
cess management (the monitoring and optimisation of a company’s tasks and activi-
ties, instead of just inspection of the final product). The 2000 version also demanded
WT
involvement by upper executives in order to integrate quality into the business system
and avoid delegation of quality functions to junior administrators. Another goal was to
improve effectiveness via process performance metrics: numerical measurement of the
effectiveness of tasks and activities. Expectations of continual process improvement
and tracking customer satisfaction were made explicit.
ISO 9000 Requirements include:

• Approve documents before distribution;
• Provide correct version of documents at points of use;
• Use your records to prove that requirements have been met; and
• Develop a procedure to control your records.
2008 Version
ISO 9001:2008 in essence re-narrates ISO 9001:2000. The 2008 version only introduced
clarifications to the existing requirements of ISO 9001:2000 and some changes intend-
ed to improve consistency with ISO 14001:2004. There were no new requirements. For
example, in ISO 9001:2008, a quality management system being upgraded just needs to
be checked to see if it is following the clarifications introduced in the amended version.
ISO 9001 is supplemented directly by two other standards of the family:
• ISO 9000:2005 “Quality management systems. Fundamentals and vocabulary”
• ISO 9004:2009 “Managing for the sustained success of an organization. A qual-

ity management approach”
Other standards, like ISO 19011 and the ISO 10000 series, may also be used for specific
parts of the quality system.

2015 version
In 2012, ISO TC 176 - responsible for ISO 9001 development - celebrated 25 years of
implementing ISO 9001, and concluded that it is necessary to create a new QMS model
for the next 25 years. This is why they commenced the official work on creating a revi-
sion of ISO 9001, starting with the new QM principles. This moment was considered
by important specialists in the field as “beginning of a new era in the development of
quality management systems.” As a result of the intensive work from this technical
committee, the revised standard ISO 9001:2015 was published by ISO on 23 Septem-
ber 2015. The scope of the standard has not changed; however, the structure and core
terms were modified to allow the standard to integrate more easily with other interna-
tional management systems standards.
The 2015 version is also less prescriptive than its predecessors and focuses on perfor-
WT
mance. This was achieved by combining the process approach with risk-based think-
ing, and employing the Plan-Do-Check-Act cycle at all levels in the organization.
Some of the key changes include:

• Greater emphasis on building a management system suited to each organiza-
tion’s particular needs
• A requirement that those at the top of an organization be involved and account-
able, aligning quality with wider business strategy
• Risk-based thinking throughout the standard makes the whole management
system a preventive tool and encourages continuous improvement
• Less prescriptive requirements for documentation: the organization can now
decide what documented information it needs and what format it should be in
• Alignment with other key management system standards through the use of a
common structure and core text
• Inclusion of Knowledge Management principles
Auditing
Two types of auditing are required to become registered to the standard: auditing by an ex-
ternal certification body (external audit) and audits by internal staff trained for this process
(internal audits). The aim is a continual process of review and assessment to verify that the
system is working as it is supposed to; to find out where it can improve; and to correct or
prevent problems identified. It is considered healthier for internal auditors to audit outside
their usual management line, so as to bring a degree of independence to their judgments.
Under the 1994 standard, the auditing process could be adequately addressed by per-
forming “conformance auditing”:

• Tell me what you do (describe the business process)

• Show me where it says that (reference the procedure manuals)
• Prove that this is what happened (exhibit evidence in documented records)
The 2000 standard uses a different approach. Auditors are expected to go beyond mere
auditing for rote conformance by focusing on risk, status, and importance. This means
they are expected to make more judgments on what is effective, rather than merely
adhering to what is formally prescribed. The difference from the previous standard can
be explained thus:
Under the 1994 version, the question was broad: “Are you doing what the man-
ual says you should be doing?”, whereas under the 2000 version, the questions
are more specific: “Will this process help you achieve your stated objectives? Is
WT
it a good process or is there a way to do it better?”
Industry-specific Interpretations
The ISO 9001 standard is generic; its parts must be carefully interpreted to make sense
within a particular organization. Developing software is not like making cheese or
offering counseling services, yet the ISO 9001 guidelines, because they are business
management guidelines, can be applied to each of these. Diverse organizations—po-
lice departments (United States), professional soccer teams (Mexico), and city councils
(UK)—have successfully implemented ISO 9001:2000 systems.
Over time, various industry sectors have wanted to standardize their interpretations of
the guidelines within their own marketplace. This is partly to ensure that their versions
of ISO 9000 have their specific requirements, but also to try and ensure that more ap-
propriately trained and experienced auditors are sent to assess them.
• The TickIT guidelines are an interpretation of ISO 9000 produced by the UK
Board of Trade to suit the processes of the information technology industry,
especially software development.
• AS9000 is the Aerospace Basic Quality System Standard, an interpretation
developed by major aerospace manufacturers. Those major manufacturers in-
clude AlliedSignal, Allison Engine, Boeing, General Electric Aircraft Engines,
Lockheed-Martin, McDonnell Douglas, Northrop Grumman, Pratt & Whitney,
Rockwell-Collins, Sikorsky Aircraft, and Sundstrand. The current version is
AS9100D.
• PS 9000 * QS 9000 is an interpretation agreed upon by major automotive
manufacturers (GM, Ford, Chrysler). It includes techniques such as FMEA and
APQP. QS 9000 is now replaced by ISO/TS 16949.
• ISO/TS 16949:2009 is an interpretation agreed upon by major automotive

manufacturers (American and European manufacturers); the latest version is

based on ISO 9001:2008. The emphasis on a process approach is stronger than
in ISO 9001:2008. ISO/TS 16949:2009 contains the full text of ISO 9001:2008
and automotive industry-specific requirements.
• TL 9000 is the Telecom Quality Management and Measurement System Stan-
dard, an interpretation developed by the telecom consortium, QuEST Forum.
In 1998 QuEST Forum developed the TL 9000 Quality Management System to
meet the supply chain quality requirements of the worldwide telecommunica-
tions industry. The TL 9000 standard is made up of two handbooks: the QMS
Requirements Handbook, and the QMS Measurement Handbook. The current
versions of the Requirements and Measurements Handbooks are 5.0. Unlike
ISO 9001 or other sector-specific standards, TL 9000 includes standardized
product and process measurements that must be reported into a central reposi-
WT
tory, which allow organizations to benchmark their performance in key process
areas against peer organizations. It is important to note that TL 9000 R5.0 con-
tains the full text of ISO 9001:2008.
• ISO 13485:2016 is the medical industry’s equivalent of ISO 9001. ISO
13485:2016 is a stand-alone standard. Because ISO 13485 is relevant to medical
devices manufacturers (unlike ISO 9001, which is applicable to any industry),
and because of the differences between the two standards relating to continual
improvement, compliance with ISO 13485 does not necessarily mean compli-
ance with ISO 9001 (and vice versa).
• ISO/IEC 90003:2014 provides guidelines for the application of ISO 9001 to
computer software.
• ISO/TS 29001 is quality management system requirements for the design, de-
velopment, production, installation, and service of products for the petroleum,
petrochemical, and natural gas industries. It is equivalent to API Spec Q1 with-
out the Monogram annex.
• ISO 22000 Food Safety Management Systems.
Effectiveness
The debate on the effectiveness of ISO 9000 commonly centers on the following questions:
1. Are the quality principles in ISO 9001 of value?
2. Does it help to implement an ISO 9001-compliant quality management system?
3. Does it help to obtain ISO 9001 certification?
Effectiveness of the ISO system being implemented depends on a number of factors,

the most significant of which are:

1. Commitment of senior management to monitor, control, and improve quality.

Organizations that implement an ISO system without this desire and commit-
ment often take the cheapest road to get a certificate on the wall and ignore
problem areas uncovered in the audits.
2. How well the ISO system integrates into current business practices. Many or-
ganizations that implement ISO try to make their system fit into a cookie-cutter
quality manual instead of creating a manual that documents existing practices
and only adds new processes to meet the ISO standard when necessary.
3. How well the ISO system focuses on improving the customer experience. The
broadest definition of quality is “Whatever the customer perceives good quality to
be.” This means that a company doesn’t necessarily have to make a product that
never fails; some customers will have a higher tolerance for product failures if they
WT
always receive shipments on-time or have a positive experience in some other di-
mension of customer service. An ISO system should take into account all areas of
the customer experience and the industry expectations, and seek to improve them
on a continual basis. This means taking into account all processes that deal with
the three stakeholders (customers, suppliers, and organization); only then will a
company be able to sustain improvements in the customer’s experience.
4. How well the auditor finds and communicates areas of improvement. While
ISO auditors may not provide consulting to the clients they audit, there is the
potential for auditors to point out areas of improvement. Many auditors simply
rely on submitting reports that indicate compliance or non-compliance with
the appropriate section of the standard; however, to most executives, this is
like speaking a foreign language. Auditors that can clearly identify and com-
municate areas of improvement in language and terms executive management
understands facilitate action on improvement initiatives by the companies they
audit. When management doesn’t understand why they were non-compliant
and the business implications associated with non-compliance, they simply ig-
nore the reports and focus on what they do understand.
Advantages
It is widely acknowledged that proper quality management improves business, often
having a positive effect on investment, market share, sales growth, sales margins, com-
petitive advantage, and avoidance of litigation. The quality principles in ISO 9000:2000
are also sound, according to Wade and Barnes, who says that “ISO 9000 guidelines
provide a comprehensive model for quality management systems that can make any
company competitive”. Sroufe and Curkovic, (2008) found benefits ranging from regis-
tration required to remain part of a supply base, better documentation, to cost benefits,
and improved involvement and communication with management. Implementing ISO
often gives the following advantages:

1. Creates a more efficient, effective operation
2. Increases customer satisfaction and retention
3. Reduces audits
4. Enhances marketing
5. Improves employee motivation, awareness, and morale
6. Promotes international trade
7. Increases profit
8. Reduces waste and increases productivity
WT
9. Common tool for standardization
10. Enables to meet the requirements of an internationally uniform quality system.
11. Motivates the employees and develops pride in them for achieving excellence.
Criticisms of ISO 9000

A common criticism of ISO 9000 and 9001 is the amount of money, time, and paper-
work required for registration. Dalgleish cites the “inordinate and often unnecessary
paperwork burden” of ISO, and says that “quality managers feel that ISO’s overhead
and paperwork are excessive and extremely inefficient”.
According to Barnes, “Opponents claim that it is only for documentation. Proponents

believe that if a company has documented its quality systems, then most of the paper-
work has already been completed”. Wilson suggests that ISO standards “elevate in-
spection of the correct procedures over broader aspects of quality”, and therefore, “the
workplace becomes oppressive and quality is not improved”.
One study showing reasons for not adopting this standard include the risks and uncer-
tainty of not knowing if there are direct relationships to improved quality, and what
kind and how many resources will be needed. Additional risks include how much cer-
tification will cost, increased bureaucratic processes and risk of poor company image
if the certification process fails. According to John Seddon, ISO 9001 promotes speci-
fication, control, and procedures rather than understanding and improvement. Wade
argues that ISO 9000 is effective as a guideline, but that promoting it as a standard
“helps to mislead companies into thinking that certification means better quality, ...
[undermining] the need for an organization to set its own quality standards”. In short,
Wade argues that reliance on the specifications of ISO 9001 does not guarantee a suc-
cessful quality system.
The standard is seen as especially prone to failure when a company is interested in cer-

tification before quality. Certifications are in fact often based on customer contractual
requirements rather than a desire to actually improve quality. “If you just want the cer-
tificate on the wall, chances are you will create a paper system that doesn’t have much
to do with the way you actually run your business”, said ISO’s Roger Frost. Certification
by an independent auditor is often seen as the problem area, and according to Barnes,
“has become a vehicle to increase consulting services”.
Dalgleish argues that while “quality has a positive effect on return on investment, mar-
ket share, sales growth, better sales margins and competitive advantage”, that “taking a
quality approach is unrelated to ISO 9000 registration”. In fact, ISO itself advises that
ISO 9001 can be implemented without certification, simply for the quality benefits that
can be achieved.
Abrahamson argues that fashionable management discourse such as Quality Circles
WT
tends to follow a lifecycle in the form of a bell curve, possibly indicating a management
fad.
Pickrell argues that ISO systems merely gauge whether the processes are being fol-
lowed. It does not gauge how good the processes are or whether the correct parame-
ters are being measured and controlled to ensure quality. Furthermore, when unique
technical solutions are involved in the creation of a new part, ISO does not validate the
robustness of the technical solution which is a key part of advanced quality planning. It
is not unheard of for an ISO-certified plant to display poor quality performance due to
poor process selection and/or poor technical solutions.
ISO/IEC 15504
ISO/IEC 15504 Information technology – Process assessment, also termed Software
Process Improvement and Capability Determination (SPICE), is a set of technical stan-
dards documents for the computer software development process and related business
management functions. It is one of the joint International Organization for Standard-
ization (ISO) and International Electrotechnical Commission (IEC) standards, which
was developed by the ISO and IEC joint subcommittee, ISO/IEC JTC 1/SC 7.
ISO/IEC 15504 was initially derived from process lifecycle standard ISO/IEC 12207
and from maturity models like Bootstrap, Trillium and the Capability Maturity Model
(CMM).
ISO/IEC 15504 has been revised by: ISO/IEC 33001:2015 Information technology –
Process assessment – Concepts and terminology as of March, 2015 and is no longer
available at ISO.
Overview
ISO/IEC 15504 is the reference model for the maturity models (consisting of capabil-

ity levels which in turn consist of the process attributes and further consist of generic
practices) against which the assessors can place the evidence that they collect during
their assessment, so that the assessors can give an overall determination of the organi-
zation’s capabilities for delivering products (software, systems, and IT services).
History
A working group was formed in 1993 to draft the international standard and used the
acronym SPICE. SPICE initially stood for Software Process Improvement and Capa-
bility Evaluation, but in consideration of French concerns over the meaning of evalu-
ation, SPICE has now been renamed Software Process Improvement and Capability
Determination. SPICE is still used for the user group of the standard, and the title
for the annual conference. The first SPICE was held in Limerick, Ireland in 2000,
SPICE 2003 was hosted by ESA in the Netherlands, SPICE 2004 was hosted in Portu-
WT
gal, SPICE 2005 in Austria, SPICE 2006 in Luxembourg, SPICE 2007 in South Korea,
SPICE 2008 in Nuremberg, Germany and SPICE 2009 in Helsinki, Finland.
The first versions of the standard focused exclusively on software development pro-
cesses. This was expanded to cover all related processes in a software business, for
example project management, configuration management, quality assurance, and so
on. The list of processes covered grew to cover six business areas: organizational, man-
agement, engineering, acquisition supply, support, and operations.
In a major revision to the draft standard in 2004, the process reference model was
removed and is now related to the ISO/IEC 12207 (Software Lifecycle Processes). The
issued standard now specifies the measurement framework and can use different pro-
cess reference models. There are five general and industry models in use.
Part 5 specifies software process assessment and part 6 specifies system process assess-
ment.
The latest work in the ISO standards working group includes creation of a maturity
model, which is planned to become ISO/IEC 15504 part 7.
The Standard
The Technical Report (TR) document for ISO/IEC TR 15504 was divided into 9 parts.
The initial International Standard was recreated in 5 parts. This was proposed from
Japan when the TRs were published at 1997.
The International Standard (IS) version of ISO/IEC 15504 now comprises 6 parts. The 7th
part is currently in an advanced Final Draft Standard form and work has started on part 8.
Part 1 of ISO/IEC TR 15504 explains the concepts and gives an overview of the frame-
work.

Reference Model
ISO/IEC 15504 contains a reference model. The reference model defines a process di-
mension and a capability dimension.
The process dimension in the reference model is not the subject of part 2 of ISO/IEC
15504, but part 2 refers to external process lifecycle standards including ISO/IEC
12207 and ISO/IEC 15288. The standard defines means to verify conformity of refer-
ence models.
Processes
The process dimension defines processes divided into the five process categories of:
• customer-supplier
WT
• engineering
• supporting
• management
• organization
With new parts being published, the process categories will expand, particularly for IT
service process categories and enterprise process categories.
Capability Levels and Process Attributes

For each process, ISO/IEC 15504 defines a capability level on the following scale:
Level Name
5 Optimizing process
4 Predictable process
3 Established process
2 Managed process
1 Performed process
0 Incomplete process
The capability of processes is measured using process attributes. The international

standard defines nine process attributes:
• 1.1 Process performance
• 2.1 Performance management
• 2.2 Work product management
• 3.1 Process definition

• 3.2 Process deployment

• 4.1 Process measurement
• 4.2 Process control
• 5.1 Process innovation
• 5.2 Process optimization
Each process attribute consists of one or more generic practices, which are further
elaborated into practice indicators to aid assessment performance.
Each process attribute is assessed on a four-point (N-P-L-F) rating scale:

• Not achieved (0 - 15%)
WT
• Partially achieved (>15% - 50%)
• Largely achieved (>50%- 85%)
• Fully achieved (>85% - 100%).
The rating is based upon evidence collected against the practice indicators, which
demonstrate fulfillment of the process attribute.
Assessments
ISO/IEC 15504 provides a guide for performing an assessment.
This includes:
• the assessment process
• the model for the assessment
• any tools used in the assessment
Assessment Process
Performing assessments is the subject of parts 2 and 3 of ISO/IEC 15504. Part 2 is the
normative part and part 3 gives a guidance to fulfill the requirements in part 2.
One of the requirements is to use a conformant assessment method for the assessment
process. The actual method is not specified in the standard although the standard plac-
es requirements on the method, method developers and assessors using the method.
The standard provides general guidance to assessors and this must be supplemented by
undergoing formal training and detailed guidance during initial assessments.
The assessment process can be generalized as the following steps:
• initiate an assessment (assessment sponsor)

• select assessor and assessment team
• plan the assessment, including processes and organizational unit to be assessed

(lead assessor and assessment team)
• pre-assessment briefing
• data collection
• data validation
• process rating
• reporting the assessment result
An assessor can collect data on a process by various means, including interviews with
WT
persons performing the process, collecting documents and quality records, and collect-
ing statistical process data. The assessor validates this data to ensure it is accurate and
completely covers the assessment scope. The assessor assesses this data (using their
expert judgment) against a process’s base practices and the capability dimension’s ge-
neric practices in the process rating step. Process rating requires some exercising of
expert judgment on the part of the assessor and this is the reason that there are require-
ments on assessor qualifications and competency. The process rating is then presented
as a preliminary finding to the sponsor (and preferably also to the persons assessed)
to ensure that they agree that the assessment is accurate. In a few cases, there may be
feedback requiring further assessment before a final process rating is made.
Assessment Model
The process assessment model (PAM) is the detailed model used for an actual assess-
ment. This is an elaboration of the process reference model (PRM) provided by the
process lifecycle standards.
The process assessment model (PAM) in part 5 is based on the process reference model
(PRM) for software: ISO/IEC 12207.
The process assessment model in part 6 is based on the process reference model for
systems: ISO/IEC 15288.
The standard allows other models to be used instead, if they meet ISO/IEC 15504’s cri-
teria, which include a defined community of interest and meeting the requirements for
content (i.e. process purpose, process outcomes and assessment indicators).
Tools used in the Assessment

There exist several assessment tools. The simplest comprise paper-based tools. In gen-
eral, they are laid out to incorporate the assessment model indicators, including the

base practice indicators and generic practice indicators. Assessors write down the as-
sessment results and notes supporting the assessment judgment.
There are a limited number of computer based tools that present the indicators and allow
users to enter the assessment judgment and notes in formatted screens, as well as automate
the collated assessment result (i.e. the process attribute ratings) and creating reports.
Assessor Qualifications and Competency

For a successful assessment, the assessor must have a suitable level of the relevant
skills and experience.
These skills include:

• personal qualities such as communication skills.
WT
• relevant education and training and experience.
• specific skills for particular categories, e.g. management skills for the manage-
ment category.
• ISO/IEC 15504 related training and experience in process capability assess-
ments.
The competency of assessors is the subject of part 3 of ISO/IEC 15504.
In summary, the ISO/IEC 15504 specific training and experience for assessors com-
prise:
• completion of a 5-day lead assessoray training course
• performing at least one assessment successfully under supervision of a compe-
tent lead assessor
• performing at least one assessment successfully as a lead assessor under the
supervision of a competent lead assessor. The competent lead assessor defines
when the assessment is successfully performed. There exist schemes for certify-
ing assessors and guiding lead assessors in making this judgement.
Uses
ISO/IEC 15504 can be used in two contexts:
• Process improvement, and
• Capability determination (= evaluation of supplier’s process capability).
Process Improvement
ISO/IEC 15504 can be used to perform process improvement within a technology or-

ganization. Process improvement is always difficult, and initiatives often fail, so it is

important to understand the initial baseline level (process capability level), and to as-
sess the situation after an improvement project. ISO 15504 provides a standard for
assessing the organization’s capacity to deliver at each of these stages.
In particular, the reference framework of ISO/IEC 15504 provides a structure for defin-
ing objectives, which facilitates specific programs to achieve these objectives.
Process improvement is the subject of part 4 of ISO/IEC 15504. It specifies require-

ments for improvement programmes and provides guidance on planning and execut-
ing improvements, including a description of an eight step improvement programme.
Following this improvement programme is not mandatory and several alternative im-
provement programmes exist.
WT
Capability Determination
An organization considering outsourcing software development needs to have a good
understanding of the capability of potential suppliers to deliver.
ISO/IEC 15504 (Part 4) can also be used to inform supplier selection decisions. The
ISO/IEC 15504 framework provides a framework for assessing proposed suppliers, as
assessed either by the organization itself, or by an independent assessor.
The organization can determine a target capability for suppliers, based on the orga-
nization’s needs, and then assess suppliers against a set of target process profiles that
specify this target capability. Part 4 of the ISO/IEC 15504 specifies the high level re-
quirements and an initiative has been started to create an extended part of the standard
covering target process profiles. Target process profiles are particularly important in
contexts where the organization (for example, a government department) is required
to accept the cheapest qualifying vendor. This also enables suppliers to identify gaps
between their current capability and the level required by a potential customer, and to
undertake improvement to achieve the contract requirements (i.e. become qualified).
Work on extending the value of capability determination includes a method called
Practical Process Profiles - which uses risk as the determining factor in setting target
process profiles. Combining risk and processes promotes improvement with active risk
reduction, hence reducing the likelihood of problems occurring.
Acceptance of ISO/IEC 15504

ISO/IEC 15504 has been successful as:
• ISO/IEC 15504 is available through National Standards Bodies.
• It has the support of the international community.
• Over 4000 assessments have been performed to date.

• Major sectors are leading the pace such as automotive, space and medical sys-
tems with industry relevant variants.
• Domain-specific models like Automotive SPICE and SPICE 4 SPACE can be

derived from it.
• There have been many international initiatives to support take-up such as

SPiCE for small and very small entities.
On the other hand, ISO/IEC 15504 has not yet been as successful as the CMMI. This
has been for several reasons:
• ISO/IEC 15504 is not available as free download but must be purchased from
the ISO (Automotive SPICE on the other hand can be freely downloaded from
the link supplied below.) CMM and CMMI are available as free downloads from
WT
the SEI website.
• The CMMI is actively sponsored (by the US Department of Defense).
• The CMM was created first, and reached critical ‘market’ share before ISO
15504 became available.
• The CMM has subsequently been replaced by the CMMI, which incorporates
many of the ideas of ISO/IEC 15504, but also retains the benefits of the CMM.
Like the CMM, ISO/IEC 15504 was created in a development context, making it dif-
ficult to apply in a service management context. But work has started to develop an
ISO/IEC 20000-based process reference model (ISO/IEC 20000-4) that can serve as
a basis for a process assessment model. This is planned to become part 8 to the stan-
dard (ISO/IEC 15504-8). In addition there are methods available that adapt its use to
various contexts.
Quality Assurance
Quality assurance (QA) is a way of preventing mistakes or defects in manufactured
products and avoiding problems when delivering solutions or services to customers;
which ISO 9000 defines as “part of quality management focused on providing con-
fidence that quality requirements will be fulfilled”. This defect prevention in quality
assurance differs subtly from defect detection and rejection in quality control, and has
been referred to as a shift left as it focuses on quality earlier in the process.
The terms “quality assurance” and “quality control” are often used interchangeably to
refer to ways of ensuring the quality of a service or product. For instance, the term “as-
surance” is often used as follows: Implementation of inspection and structured testing

as a measure of quality assurance in a television set software project at Philips Semi-

conductors is described. The term “control”, however, is used to describe the fifth phase
of the DMAIC model. DMAIC is a data-driven quality strategy used to improve processes.
Quality assurance comprises administrative and procedural activities implemented in

a quality system so that requirements and goals for a product, service or activity will be
fulfilled. It is the systematic measurement, comparison with a standard, monitoring of
processes and an associated feedback loop that confers error prevention. This can be
contrasted with quality control, which is focused on process output.
Quality assurance includes two principles: “Fit for purpose” (the product should be
suitable for the intended purpose); and “right first time” (mistakes should be eliminat-
ed). QA includes management of the quality of raw materials, assemblies, products and
components, services related to production, and management, production and inspec-
WT
tion processes. The two principles also manifest before the background of developing
(engineering) a novel technical product: The task of engineering is to make it work
once, while the task of quality assurance is to make it work all the time.
Suitable quality is determined by product users, clients or customers, not by society in
general. It is not related to cost, and adjectives or descriptors such as “high” and “poor”
are not applicable. For example, a low priced product may be viewed as having high
quality because it is disposable, whereas another may be viewed as having poor quality
because it is not disposable.
History
Initial Efforts to Control the Quality of Production
During the Middle Ages, guilds adopted responsibility for the quality of goods and ser-
vices offered by their members, setting and maintaining certain standards for guild
membership.
Royal governments purchasing material were interested in quality control as custom-

ers. For this reason, King John of England appointed William Wrotham to report about
the construction and repair of ships. Centuries later, Samuel Pepys, Secretary to the
British Admiralty, appointed multiple such overseers.
Prior to the extensive division of labor and mechanization resulting from the Industrial
Revolution, it was possible for workers to control the quality of their own products.
The Industrial Revolution led to a system in which large groups of people performing a
specialized type of work were grouped together under the supervision of a foreman who
was appointed to control the quality of work manufactured.
Wartime Production
During the time of the First World War, manufacturing processes typically became

more complex with larger numbers of workers being supervised. This period saw the
widespread introduction of mass production and piece work, which created problems
as workmen could now earn more money by the production of extra products, which
in turn occasionally led to poor quality workmanship being passed on to the assembly
lines. To counter bad workmanship, full-time inspectors were introduced to identify,
quarantine and ideally correct product quality failures. Quality control by inspection in
the 1920s and 1930s led to the growth of quality inspection functions, separately orga-
nized from production and large enough to be headed by superintendents.
The systematic approach to quality started in industrial manufacturing during the

1930s, mostly in the U.S., when some attention was given to the cost of scrap and re-
work. The impact of mass production required during the Second World War made it
necessary to introduce an improved form of quality control known as Statistical Quality
Control, or SQC. Some of the initial work for SQC is credited to Walter A. Shewhart of
WT
Bell Labs, starting with his famous one-page memorandum of 1924.
SQC includes the concept that every production piece cannot be fully inspected into
acceptable and non-acceptable batches. By extending the inspection phase and making
inspection organizations more efficient, it provides inspectors with control tools such
as sampling and control charts, even where 100 percent inspection is not practicable.
Standard statistical techniques allow the producer to sample and test a certain propor-
tion of the products for quality to achieve the desired level of confidence in the quality
of the entire batch or production run.
Postwar
In the period following World War II, many countries’ manufacturing capabilities that
had been destroyed during the war were rebuilt. General Douglas MacArthur oversaw
the re-building of Japan. During this time, General MacArthur involved two key in-
dividuals in the development of modern quality concepts: W. Edwards Deming and
Joseph Juran. Both individuals promoted the collaborative concepts of quality to Jap-
anese business and technical groups, and these groups utilized these concepts in the
redevelopment of the Japanese economy.
Although there were many individuals trying to lead United States industries towards
a more comprehensive approach to quality, the U.S. continued to apply the Quality
Control (QC) concepts of inspection and sampling to remove defective product from
production lines, essentially ignoring advances in QA for decades.
Approaches
Failure Testing
A valuable process to perform on a whole consumer product is failure testing or stress
testing. In mechanical terms this is the operation of a product until it fails, often under

stresses such as increasing vibration, temperature, and humidity. This exposes many
unanticipated weaknesses in a product, and the data is used to drive engineering and
manufacturing process improvements. Often quite simple changes can dramatically
improve product service, such as changing to mold-resistant paint or adding lock-wash-
er placement to the training for new assembly personnel.
Statistical Control
Statistical control is based on analyses of objective and subjective data. Many organiza-
tions use statistical process control as a tool in any quality improvement effort to track
quality data. Any product can be statistically charted as long as they have a common
cause variance or special cause variance to track.
Walter Shewart of Bell Telephone Laboratories recognized that when a product is made,
WT
data can be taken from scrutinized areas of a sample lot of the part and statistical vari-
ances are then analyzed and charted. Control can then be implemented on the part in
the form of rework or scrap, or control can be implemented on the process that made
the part, ideally eliminating the defect before more parts can be made like it.
Total Quality Management

The quality of products is dependent upon that of the participating constituents, some
of which are sustainable and effectively controlled while others are not. The process(es)
which are managed with QA pertain to Total Quality Management.
If the specification does not reflect the true quality requirements, the product’s quality
cannot be guaranteed. For instance, the parameters for a pressure vessel should cover
not only the material and dimensions but operating, environmental, safety, reliability
and maintainability requirements.
Models and Standards

ISO 17025 is an international standard that specifies the general requirements for the com-
petence to carry out tests and or calibrations. There are 15 management requirements and
10 technical requirements. These requirements outline what a laboratory must do to be-
come accredited. Management system refers to the organization’s structure for managing
its processes or activities that transform inputs of resources into a product or service which
meets the organization’s objectives, such as satisfying the customer’s quality requirements,
complying with regulations, or meeting environmental objectives. WHO has developed
several tools and offers training courses for quality assurance in public health laboratories.
The Capability Maturity Model Integration (CMMI) model is widely used to implement
Process and Product Quality Assurance (PPQA) in an organization. The CMMI ma-
turity levels can be divided into 5 steps, which a company can achieve by performing
specific activities within the organization.

Company Quality
During the 1980s, the concept of “company quality” with the focus on management and
people came to the fore. It was realized that, if all departments approached quality with an
open mind, success was possible if the management led the quality improvement process.
The company-wide quality approach places an emphasis on four aspects :-
1. Elements such as controls, job management, adequate processes, performance

and integrity criteria and identification of records
2. Competence such as knowledge, skills, experiences, qualifications
3. Soft elements, such as personnel integrity, confidence, organizational culture,

motivation, team spirit and quality relationships.
WT
4. Infrastructure (as it enhances or limits functionality)
The quality of the outputs is at risk if any of these aspects is deficient.
QA is not limited to manufacturing, and can be applied to any business or non-business

activity, including: design, consulting, banking, insurance, computer software develop-
ment, retailing, investment, transportation, education, and translation.
It comprises a quality improvement process, which is generic in the sense that it can be
applied to any of these activities and it establishes a behavior pattern, which supports
the achievement of quality.
This in turn is supported by quality management practices which can include a number
of business systems and which are usually specific to the activities of the business unit
concerned.
In manufacturing and construction activities, these business practices can be equated

to the models for quality assurance defined by the International Standards contained in
the ISO 9000 series and the specified Specifications for quality systems.
In the system of Company Quality, the work being carried out was shop floor inspection
which did not reveal the major quality problems. This led to quality assurance or total
quality control, which has come into being recently.
In practice
Medical Industry
QA is very important in the medical field because it helps to identify the standards
of medical equipments and services. Hospitals and laboratories make use of external
agencies in order to ensure standards for equipment such as X-ray machines, Diagnos-
tic Radiology and AERB.

Aerospace Industry
The term product assurance (PA) is often used instead of quality assurance and is,
alongside project management and engineering, one of the three primary project func-
tions. Quality assurance is seen as one part of product assurance. Due to the sometimes
catastrophic consequences a single failure can have for human lives, the environment,
a device, or a mission, product assurance plays a particularly important role here. It has
organizational, budgetary and product developmental independence meaning that it
reports to highest management only, has its own budget, and does not expend labor to
help build a product. Product assurance stands on an equal footing with project man-
agement but embraces the customer’s point of view.
Software Development
WT
Software Quality Assurance consists of a means of monitoring the software engineering
processes and methods used to ensure quality. The methods by which this is accom-
plished are many and varied, and may include ensuring conformance to one or more
standards, such as ISO 9000 or a model such as CMMI. In addition, enterprise quality
management software is used to correct issues such as: supply chain disaggregation
and regulatory compliance which are vital among medical device manufacturers.
Using Contractors and/or Consultants

Consultants and contractors are sometimes employed when introducing new quality
practices and methods, particularly where the relevant skills and expertise are not
available within the organization or when allocating the available internal resourc-
es are not available. Consultants and contractors will often employ Quality Man-
agement Systems (QMS), auditing and procedural documentation writing CMMI,
Six Sigma, Measurement Systems Analysis (MSA), Quality Function Deployment
(QFD), Failure Mode and Effects Analysis (FMEA), and Advance Product Quality
Planning (APQP).
5 Whys
5 Whys is an iterative interrogative technique used to explore the cause-and-effect re-
lationships underlying a particular problem. The primary goal of the technique is to
determine the root cause of a defect or problem by repeating the question “Why?” Each
answer forms the basis of the next question. The “5” in the name derives from an anec-
dotal observation on the number of iterations needed to resolve the problem.
The technique was formally developed by Sakichi Toyoda and was used within the Toy-
ota Motor Corporation during the evolution of its manufacturing methodologies. In

other companies, it appears in other forms. Under Ricardo Semler, Semco practices
“three whys” and broadens the practice to cover goal setting and decision making.
Not all problems have a single root cause. If one wishes to uncover multiple root causes,
the method must be repeated asking a different sequence of questions each time.
The method provides no hard and fast rules about what lines of questions to explore, or
how long to continue the search for additional root causes. Thus, even when the meth-
od is closely followed, the outcome still depends upon the knowledge and persistence
of the people involved.
Example
• The vehicle will not start. (the problem)
WT
1. Why? - The battery is dead. (First why)
2. Why? - The alternator is not functioning. (Second why)
3. Why? - The alternator belt has broken. (Third why)
4. Why? - The alternator belt was well beyond its useful service life and not
replaced. (Fourth why)
5. Why? - The vehicle was not maintained according to the recommended ser-
vice schedule. (Fifth why, a root cause)
The questioning for this example could be taken further to a sixth, seventh, or higher
level, but five iterations of asking why is generally sufficient to get to a root cause. The
key is to encourage the trouble-shooter to avoid assumptions and logic traps and in-
stead trace the chain of causality in direct increments from the effect through any layers
of abstraction to a root cause that still has some connection to the original problem.
Note that, in this example, the fifth why suggests a broken process or an alterable be-
haviour, which is indicative of reaching the root-cause level.
It is interesting to note that the last answer points to a process. This is one of the most
important aspects in the 5 Why approach - the real root cause should point toward a
process that is not working well or does not exist. Untrained facilitators will often ob-
serve that answers seem to point towards classical answers such as not enough time,
not enough investments, or not enough manpower. These answers may be true, but
they are out of our control. Therefore, instead of asking the question why?, ask why did
the process fail?
A key phrase to keep in mind in any 5 Why exercise is “people do not fail, processes do”.
History
The technique was originally developed by Sakichi Toyoda and was used within the

Toyota Motor Corporation during the evolution of its manufacturing methodologies.

It is a critical component of problem-solving training, delivered as part of the induc-
tion into the Toyota Production System. The architect of the Toyota Production Sys-
tem, Taiichi Ohno, described the 5 Whys method as “the basis of Toyota’s scientific
approach . . . by repeating why five times, the nature of the problem as well as its solu-
tion becomes clear.” The tool has seen widespread use beyond Toyota, and is now used
within Kaizen, lean manufacturing, and Six Sigma.
Techniques
Two primary techniques are used to perform a 5 Whys analysis:
• the fishbone (or Ishikawa) diagram
• a tabular format
WT
These tools allow for analysis to be branched in order to provide multiple root causes.
Rules of Performing 5Whys

In order to carry out the 5-Why analysis properly, the following advice should be fol-
lowed:
1. It is necessary to engage the management in the 5Whys process in the company.

For the analysis itself, consider what is the right working group. Also consider
bringing in a facilitator for more difficult topics.
2. Use paper or whiteboard instead of computers.
3. Write down the problem and make sure that all people understand it.
4. Distinguish causes from symptoms.
5. Pay attention to the logic of cause-and-effect relationship.
6. Make sure that root causes certainly lead to the mistake by reversing the sen-
tences created as a result of the analysis with the use of the expression “and
therefore”.
7. Try to make our answers more precise.
8. Look for the cause step by step. Don’t jump to conclusions.
9. Base our statements on facts and knowledge.
10. Assess the process, not people.
11. Never leave “human error”, “worker’s inattention”, etc., as the root cause.

12. Foster an atmosphere of trust and sincerity.

13. Ask the question “Why” until the root cause is determined, i.e. the cause the
elimination of which will prevent the error from occurring again.
14. When you form the answer for question “Why” - it should happen from the cus-
tomer’s point of view.
Criticism
While the 5 Whys is a powerful tool for engineers or technically savvy individuals to
help get to the true causes of problems, it has been criticized by Teruyuki Minoura,
former managing director of global purchasing for Toyota, as being too basic a tool to
analyze root causes to the depth that is needed to ensure that they are fixed. Reasons
for this criticism include:
WT
• Tendency for investigators to stop at symptoms rather than going on to low-
er-level root causes.
• Inability to go beyond the investigator’s current knowledge - cannot find causes
that they do not already know.
• Lack of support to help the investigator ask the right “why” questions.
• Results are not repeatable - different people using 5 Whys come up with differ-
ent causes for the same problem.
• Tendency to isolate a single root cause, whereas each question could elicit many
different root causes.
These can be significant problems when the method is applied through deduction only.
On-the-spot verification of the answer to the current “why” question before proceeding
to the next is recommended to avoid these issues. In addition, performing logical tests
for necessity and sufficiency at each level can help avoid the selection of spurious caus-
es and promote the consideration of multiple root causes.
Business Process Mapping

Business process mapping refers to activities involved in defining what a business enti-
ty does, who is responsible, to what standard a business process should be completed,
and how the success of a business process can be determined.
The main purpose behind business process mapping is to assist organizations in becoming
more effective. A clear and detailed business process map or diagram allows outside firms
to come in and look at whether or not improvements can be made to the current process.

Business process mapping takes a specific objective and helps to measure and compare
that objective alongside the entire organization’s objectives to make sure that all pro-
cesses are aligned with the company’s values and capabilities.
International Organization for Standardization or ISO 9001 : 2015 encourages a pro-

cess approach to quality management. It is important to understand how each process
relates to other processes within the organization and how those interactions impact
Quality Management.
History
Early History
The first structured method for documenting process flow, the flow process chart,
was introduced by Frank Gilbreth to members of ASME in 1921 as the presentation
WT
“Process Charts—First Steps in Finding the One Best Way”. Gilbreth’s tools were
quickly integrated into industrial engineering curricula. In the early 1930s, an in-
dustrial engineer, Allan H. Mogensen began training business people by using these
tools of industrial engineering at his Work Simplification Conferences in Lake Placid,
New York. A 1944 graduate of Mogensen’s class, Art Spinanger, took the tools back
to Procter and Gamble where he developed their work simplification program called
the Deliberate Methods Change Program. Another 1944 graduate, Ben S. Graham,
Director of Formcraft Engineering at Standard Register Industrial, adapted the flow
process chart to information processing with his development of the multi-flow pro-
cess chart to display multiple documents and their relationships. In 1947, ASME ad-
opted a symbol set derived from Gilbreth’s original work as the ASME Standard for
Process Charts.
Business process mapping, also known as process charts, has become much more prev-
alent and understood in the business world in recent years. Process maps can be used
in every section of life or business.
The Major Steps of Process Improvement using Process Mapping
1. Process identification - identify objectives, scope, players and work areas.
2. Information gathering - gather process facts (what, who, where, when) from the
people who do the work.
3. Process Mapping - convert facts into a process map.
4. Analysis - work through the map, challenging each step (what-why?, who-why?,
where-why?, when-why?, how-why?)
5. Develop/Install New Methods - eliminate unnecessary work, combine steps, re-

arrange steps, add new steps where necessary

6. Manage process - maintain process map in library, review routinely, and mon-
itor process for changes
Process mapping is capable of supporting several important business goals:
• Business process improvement
• Training
• Process / workflow clarification
• Regulatory compliance
• Internal audit
• Role clarity (RACI)
WT
Recent Developments
Process mapping has overlapped with software development incorporating tools that
can attach metadata to activities, drivers and triggers to provide some automation of
software process coding.
Quality improvement practitioners have noted that various graphical descriptions of

processes can be useful. These include: detailed flow-charts, work flow diagrams and
value stream maps. Each map is helpful depending on the process questions and theo-
ries being considered. In these situations process map implies the use of process flow
and the current understanding of the causal structure.
Six Sigma practitioners use the term Business Process Architecture to describe the map-
ping of business processes as series of cross-functional flowcharts. Under this school of
thought, each flowchart is of a certain level (between 0 and 4) based on the amount of
detail the flowchart contains. A level 0 flowchart represents the least amount of detail,
and usually contains one or two steps. A level 4 flowchart represents the most amount
of detail, and can include hundreds of steps. At this level every task, however minor, is
represented.
Primary Example
Flowchart is a primary type of business process mapping. It consists of some symbols
such as arrows, circle, diamond, box, oval or rectangle. The type of Flowchart just de-
scribed is sometimes referred to as a “detailed” flowchart because it includes in detail,
the inputs, activities, decision points, and outputs of any process.
The example is Proposed Patient Appointment Procedure. It starts with “preparation of

appointment book” followed by a decision whether the appointment is shore or fleet. If
the appointment is fleet, inform patient they can call 1500 to make own appointments

for next few days, if the appointment is shore, confirm 24 hours prior to appointment.
Next confirm that the patient confirmed. If a patient did not call, the appointment is
canceled, otherwise the patient is given a confirmation number. Finally confirm that
the patient showed for the appointment. If not, a standby patient is placed in the ap-
pointment slot, the appointment book is marked “Failure” and a failure report is sub-
mitted from front desk to fleet liaison. If a patient showed for appointment, put “Pa-
tient showed” in appointment book.
Example WT Proposed Patient Appointment Procedure
An easy example to follow is making breakfast
We must first understand that making breakfast is a process. The ingredients are the
inputs and the final breakfast ready to be served is the output. This graph shows the
breakdown of each process vertically and horizontally. For instance, cooking ingredi-
ents is broken down into all of the different tasks that need to be done: cook bacon,
cook eggs, toast bread, and fry potatoes. These tasks are then broken down further be-

low. In order to cook eggs, one must first heat the pan, pour the mixture, stir mixture,
add pepper, and remove eggs. This is a prime example of how process mapping can be
used in any situation/process in order to understand all of the different parts so that we
can complete the process with a better understanding for more efficiency. Although this
is just a simple example, many aspects of business, including supply chain, operations,
marketing, finance, and accounting, use similar process mapping activities to improve
efficiency.
Control Chart
Control charts, also known as Shewhart charts (after Walter A. Shewhart) or pro-
cess-behavior charts, are a statistical process control tool used to determine if a manu-
WT
facturing or business process is in a state of control.
Overview
If analysis of the control chart indicates that the process is currently under control (i.e.,
is stable, with variation only coming from sources common to the process), then no cor-
rections or changes to process control parameters are needed or desired. In addition,
data from the process can be used to predict the future performance of the process. If
the chart indicates that the monitored process is not in control, analysis of the chart can
help determine the sources of variation, as this will result in degraded process perfor-
mance. A process that is stable but operating outside of desired (specification) limits
(e.g., scrap rates may be in statistical control but above desired limits) needs to be
improved through a deliberate effort to understand the causes of current performance
and fundamentally improve the process.
The control chart is one of the seven basic tools of quality control. Typically control
charts are used for time-series data, though they can be used for data that have logical
comparability (i.e. you want to compare samples that were taken all at the same time,
or the performance of different individuals), however the type of chart used to do this
requires consideration.
History
The control chart was invented by Walter A. Shewhart while working for Bell Labs
in the 1920s. The company’s engineers had been seeking to improve the reliability of
their telephony transmission systems. Because amplifiers and other equipment had to
be buried underground, there was a stronger business need to reduce the frequency
of failures and repairs. By 1920, the engineers had already realized the importance of
reducing variation in a manufacturing process. Moreover, they had realized that con-
tinual process-adjustment in reaction to non-conformance actually increased variation

and degraded quality. Shewhart framed the problem in terms of Common- and spe-
cial-causes of variation and, on May 16, 1924, wrote an internal memo introducing the
control chart as a tool for distinguishing between the two. Shewhart’s boss, George
Edwards, recalled: “Dr. Shewhart prepared a little memorandum only about a page
in length. About a third of that page was given over to a simple diagram which we
would all recognize today as a schematic control chart. That diagram, and the short text
which preceded and followed it set forth all of the essential principles and consider-
ations which are involved in what we know today as process quality control.” Shewhart
stressed that bringing a production process into a state of statistical control, where
there is only common-cause variation, and keeping it in control, is necessary to predict
future output and to manage a process economically.
Shewhart created the basis for the control chart and the concept of a state of sta-
tistical control by carefully designed experiments. While Shewhart drew from pure
WT
mathematical statistical theories, he understood that data from physical process-
es typically produce a “normal distribution curve” (a Gaussian distribution, also
commonly referred to as a “bell curve”). He discovered that observed variation in
manufacturing data did not always behave the same way as data in nature (Brown-
ian motion of particles). Shewhart concluded that while every process displays vari-
ation, some processes display controlled variation that is natural to the process,
while others display uncontrolled variation that is not present in the process causal
system at all times.
In 1924 or 1925, Shewhart’s innovation came to the attention of W. Edwards Deming,

then working at the Hawthorne facility. Deming later worked at the United States De-
partment of Agriculture and became the mathematical advisor to the United States
Census Bureau. Over the next half a century, Deming became the foremost champion
and proponent of Shewhart’s work. After the defeat of Japan at the close of World War
II, Deming served as statistical consultant to the Supreme Commander for the Allied
Powers. His ensuing involvement in Japanese life, and long career as an industrial con-
sultant there, spread Shewhart’s thinking, and the use of the control chart, widely in
Japanese manufacturing industry throughout the 1950s and 1960s.
Chart Details
A control chart consists of:
• Points representing a statistic (e.g., a mean, range, proportion) of measure-

ments of a quality characteristic in samples taken from the process at different
times (i.e., the data)
• The mean of this statistic using all the samples is calculated (e.g., the mean of
the means, mean of the ranges, mean of the proportions)
• A center line is drawn at the value of the mean of the statistic

• The standard deviation (e.g., sqrt(variance) of the mean) of the statistic is also
calculated using all the samples
• Upper and lower control limits (sometimes called “natural process limits”) that
indicate the threshold at which the process output is considered statistically
‘unlikely’ and are drawn typically at 3 standard deviations from the center line
The chart may have other optional features, including:
• Upper and lower warning or control limits, drawn as separate lines, typically
two standard deviations above and below the center line
• Division into zones, with the addition of rules governing frequencies of obser-
vations in each zone
WT
• Annotation with events of interest, as determined by the Quality Engineer in
charge of the process’s quality
• Action on Special Causes
(n.b., there are several rule sets for detection of signal, this is just one set. The
rule set should be clearly stated.)
1. Any point outside of the control limits
2. A Run of 7 Points all above or All below the central line - Stop the production
• Quarantine and 100% check
• Adjust Process.
• Check 5 Consecutive samples
• Continue The Process.
3. A Run of 7 Point Up or Down - Instruction as above
Chart usage
If the process is in control (and the process statistic is normal), 99.7300% of all the
points will fall between the control limits. Any observations outside the limits, or sys-
tematic patterns within, suggest the introduction of a new (and likely unanticipated)
source of variation, known as a special-cause variation. Since increased variation means
increased quality costs, a control chart “signaling” the presence of a special-cause re-
quires immediate investigation.
This makes the control limits very important decision aids. The control limits provide infor-
mation about the process behavior and have no intrinsic relationship to any specification
targets or engineering tolerance. In practice, the process mean (and hence the centre line)

may not coincide with the specified value (or target) of the quality characteristic because
the process design simply cannot deliver the process characteristic at the desired level.
Control charts limit specification limits or targets because of the tendency of those involved
with the process (e.g., machine operators) to focus on performing to specification when in
fact the least-cost course of action is to keep process variation as low as possible. Attempt-
ing to make a process whose natural centre is not the same as the target perform to target
specification increases process variability and increases costs significantly and is the cause
of much inefficiency in operations. Process capability studies do examine the relationship
between the natural process limits (the control limits) and specifications, however.
The purpose of control charts is to allow simple detection of events that are indica-
tive of actual process change. This simple decision can be difficult where the process
characteristic is continuously varying; the control chart provides statistically objective
WT
criteria of change. When change is detected and considered good its cause should be
identified and possibly become the new way of working, where the change is bad then
its cause should be identified and eliminated.
The purpose in adding warning limits or subdividing the control chart into zones is
to provide early notification if something is amiss. Instead of immediately launching
a process improvement effort to determine whether special causes are present, the
Quality Engineer may temporarily increase the rate at which samples are taken from
the process output until it’s clear that the process is truly in control. Note that with
three-sigma limits, common-cause variations result in signals less than once out of ev-
ery twenty-two points for skewed processes and about once out of every three hundred
seventy (1/370.4) points for normally distributed processes. The two-sigma warning
levels will be reached about once for every twenty-two (1/21.98) plotted points in nor-
mally distributed data. (For example, the means of sufficiently large samples drawn
from practically any underlying distribution whose variance exists are normally dis-
tributed, according to the Central Limit Theorem.)
Choice of Limits
Shewhart set 3-sigma (3-standard deviation) limits on the following basis.
• The coarse result of Chebyshev’s inequality that, for any probability distribu-
tion, the probability of an outcome greater than k standard deviations from the
mean is at most 1/k2.
• The finer result of the Vysochanskii–Petunin inequality, that for any unimodal
probability distribution, the probability of an outcome greater than k standard
deviations from the mean is at most 4/(9k2).
• In the Normal distribution, a very common probability distribution, 99.7% of
the observations occur within three standard deviations of the mean.

Shewhart summarized the conclusions by saying:
... the fact that the criterion which we happen to use has a fine ancestry in highbrow
statistical theorems does not justify its use. Such justification must come from em-
pirical evidence that it works. As the practical engineer might say, the proof of the
pudding is in the eating.
Though he initially experimented with limits based on probability distributions, She-

whart ultimately wrote:
Some of the earliest attempts to characterize a state of statistical control were in-
spired by the belief that there existed a special form of frequency function f and it was
early argued that the normal law characterized such a state. When the normal law
was found to be inadequate, then generalized functional forms were tried. Today,
however, all hopes of finding a unique functional form f are blasted.
WT
The control chart is intended as a heuristic. Deming insisted that it is not a hypothesis
test and is not motivated by the Neyman–Pearson lemma. He contended that the dis-
joint nature of population and sampling frame in most industrial situations compro-
mised the use of conventional statistical techniques. Deming’s intention was to seek
insights into the cause system of a process ...under a wide range of unknowable cir-
cumstances, future and past.... He claimed that, under such conditions, 3-sigma limits
provided ... a rational and economic guide to minimum economic loss... from the two
errors:
1. Ascribe a variation or a mistake to a special cause (assignable cause) when in
fact the cause belongs to the system (common cause). (Also known as a Type I
error or False Positive)
2. Ascribe a variation or a mistake to the system (common causes) when in fact
the cause was a special cause (assignable cause). (Also known as a Type II er-
ror or False Negative)
Choice of Sample Size

The sample size plays a critical role in the overall performance of any control chart.
Many articles have studied the influence of the sample size on the performance of the
control charts. It is found that the best sample size of the X bar & R and X bar & S charts
is n = 2 for many tested cases.
Calculation of Standard Deviation

As for the calculation of control limits, the standard deviation (error) required is that
of the common-cause variation in the process. Hence, the usual estimator, in terms of
sample variance, is not used as this estimates the total squared-error loss from both
common- and special-causes of variation.

An alternative method is to use the relationship between the range of a sample and its
standard deviation derived by Leonard H. C. Tippett, as an estimator which tends to be
less influenced by the extreme observations which typify special-causes.
Rules for Detecting Signals

The most common sets are:
• The Western Electric rules
• The Wheeler rules (equivalent to the Western Electric zone tests)
• The Nelson rules
There has been particular controversy as to how long a run of observations, all on the
WT
same side of the centre line, should count as a signal, with 6, 7, 8 and 9 all being advo-
cated by various writers.
The most important principle for choosing a set of rules is that the choice be made
before the data is inspected. Choosing rules once the data have been seen tends to in-
crease the Type I error rate owing to testing effects suggested by the data.
Alternative Bases
In 1935, the British Standards Institution, under the influence of Egon Pearson and
against Shewhart’s spirit, adopted control charts, replacing 3-sigma limits with limits
based on percentiles of the normal distribution. This move continues to be represented
by John Oakland and others but has been widely deprecated by writers in the She-
whart–Deming tradition.
Performance of Control Charts

When a point falls outside of the limits established for a given control chart, those re-
sponsible for the underlying process are expected to determine whether a special cause
has occurred. If one has, it is appropriate to determine if the results with the special
cause are better than or worse than results from common causes alone. If worse, then
that cause should be eliminated if possible. If better, it may be appropriate to intention-
ally retain the special cause within the system producing the results.
Even when a process is in control (that is, no special causes are present in the system),
there is approximately a 0.27% probability of a point exceeding 3-sigma control limits.
So, even an in control process plotted on a properly constructed control chart will even-
tually signal the possible presence of a special cause, even though one may not have
actually occurred. For a Shewhart control chart using 3-sigma limits, this false alarm
occurs on average once every 1/0.0027 or 370.4 observations. Therefore, the in-control
average run length (or in-control ARL) of a Shewhart chart is 370.4.

Meanwhile, if a special cause does occur, it may not be of sufficient magnitude for the
chart to produce an immediate alarm condition. If a special cause occurs, one can de-
scribe that cause by measuring the change in the mean and/or variance of the process
in question. When those changes are quantified, it is possible to determine the out-of-
control ARL for the chart.
It turns out that Shewhart charts are quite good at detecting large changes in the pro-
cess mean or variance, as their out-of-control ARLs are fairly short in these cases. How-
ever, for smaller changes (such as a 1- or 2-sigma change in the mean), the Shewhart
chart does not detect these changes efficiently. Other types of control charts have been
developed, such as the EWMA chart, the CUSUM chart and the real-time contrasts
chart, which detect smaller changes more efficiently by making use of information from
observations collected prior to the most recent data point.
WT
Many control charts work best for numeric data with Gaussian assumptions. The re-
al-time contrasts chart was proposed to monitor process with complex characteristics,
e.g. high-dimensional, mix numerical and categorical, missing-valued, non-Gaussian,
non-linear relationship.
Criticisms
Several authors have criticised the control chart on the grounds that it violates the like-
lihood principle. However, the principle is itself controversial and supporters of control
charts further argue that, in general, it is impossible to specify a likelihood function for
a process not in statistical control, especially where knowledge about the cause system
of the process is weak.
Some authors have criticised the use of average run lengths (ARLs) for comparing con-
trol chart performance, because that average usually follows a geometric distribution,
which has high variability and difficulties.
Some authors have criticized that most control charts focus on numeric data. Nowa-
days, process data can be much more complex, e.g. non-Gaussian, mix numerical and
categorical, or be missing-valued.
Types of Charts
Process obser- Process Size of

Chart Process observation vations rela- observations shift to
tionships type detect
Quality characteristic mea- Large (≥
x and R chart surement within one subgroup
Independent Variables
1.5σ)

x and s chart surement within one subgroup
Independent Variables
1.5σ)

Shewhart indi-
viduals control Quality characteristic mea- Large (≥
Independent Variables†
chart (ImR chart surement for one observation 1.5σ)
or XmR chart)
Three-way chart Independent Variables
surement within one subgroup 1.5σ)
Fraction nonconforming with- Large (≥
p-chart Independent Attributes†
in one subgroup 1.5σ)
Number nonconforming with- Large (≥
np-chart Independent Attributes†
in one subgroup 1.5σ)
Number of nonconformances Large (≥
c-chart Independent Attributes†
within one subgroup 1.5σ)
Nonconformances per unit Large (≥
u-chart Independent Attributes†
within one subgroup 1.5σ)
Exponentially weighted mov-
WT
ing average of quality charac- Attributes or Small (<
EWMA chart Independent
teristic measurement within variables 1.5σ)
one subgroup
Cumulative sum of quality
Attributes or Small (<
CUSUM chart characteristic measurement Independent
variables 1.5σ)
within one subgroup
Time series Quality characteristic mea- Attributes or
Autocorrelated N/A
model surement within one subgroup variables
Dependent of
Regression con- Quality characteristic mea- Large (≥
process control Variables
trol chart surement within one subgroup 1.5σ)
variables
†
Some practitioners also recommend the use of Individuals charts for attribute data, par-
ticularly when the assumptions of either binomially distributed data (p- and np-charts)
or Poisson-distributed data (u- and c-charts) are violated. Two primary justifications are
given for this practice. First, normality is not necessary for statistical control, so the In-
dividuals chart may be used with non-normal data. Second, attribute charts derive the
measure of dispersion directly from the mean proportion (by assuming a probability
distribution), while Individuals charts derive the measure of dispersion from the data,
independent of the mean, making Individuals charts more robust than attributes charts
to violations of the assumptions about the distribution of the underlying population. It
is sometimes noted that the substitution of the Individuals chart works best for large
counts, when the binomial and Poisson distributions approximate a normal distribution.
i.e. when the number of trials n > 1000 for p- and np-charts or λ > 500 for u- and c-charts.
Critics of this approach argue that control charts should not be used when their un-
derlying assumptions are violated, such as when process data is neither normally dis-
tributed nor binomially (or Poisson) distributed. Such processes are not in control and
should be improved before the application of control charts. Additionally, application
of the charts in the presence of such deviations increases the type I and type II error
rates of the control charts, and may make the chart of little practical use.

Design of Experiments
Design of experiments with full factorial design (left), response surface with second-degree
WT
polynomial (right)
The design of experiments (DOE, DOX, or experimental design) is the design of any
task that aims to describe or explain the variation of information under conditions that
are hypothesized to reflect the variation. The term is generally associated with true ex-
periments in which the design introduces conditions that directly affect the variation,
but may also refer to the design of quasi-experiments, in which natural conditions that
influence the variation are selected for observation.
In its simplest form, an experiment aims at predicting the outcome by introducing a change
of the preconditions, which is reflected in a variable called the predictor (independent).
The change in the predictor is generally hypothesized to result in a change in the second
variable, hence called the outcome (dependent) variable. Experimental design involves not
only the selection of suitable predictors and outcomes, but planning the delivery of the ex-
periment under statistically optimal conditions given the constraints of available resources.
Main concerns in experimental design include the establishment of validity, reliability,

and replicability. For example, these concerns can be partially addressed by carefully
choosing the predictor, reducing the risk of measurement error, and ensuring that the
documentation of the method is sufficiently detailed. Related concerns include achiev-
ing appropriate levels of statistical power and sensitivity.
Correctly designed experiments advance knowledge in the natural and social sciences
and engineering. Other applications include marketing and policy making.
History
Systematic Clinical Trials
In 1747, while serving as surgeon on HMS Salisbury, James Lind carried out a system-
atic clinical trial to compare remedies for scurvy. This systematic clinical trial consti-
tutes a type of DOE.

Lind selected 12 men from the ship, all suffering from scurvy. Lind limited his subjects
to men who “were as similar as I could have them,” that is, he provided strict entry re-
quirements to reduce extraneous variation. He divided them into six pairs, giving each
pair different supplements to their basic diet for two weeks. The treatments were all
remedies that had been proposed:
• A quart of cider every day.
• Twenty five gutts (drops) of vitriol (sulphuric acid) three times a day upon an
empty stomach.
• One half-pint of seawater every day.
• A mixture of garlic, mustard, and horseradish in a lump the size of a nutmeg.
WT
• Two spoonfuls of vinegar three times a day.
• Two oranges and one lemon every day.
The citrus treatment stopped after six days when they ran out of fruit, but by that time one
sailor was fit for duty while the other had almost recovered. Apart from that, only group
one (cider) showed some effect of its treatment. The remainder of the crew presumably
served as a control, but Lind did not report results from any control (untreated) group.
Statistical Experiments, following Charles S. Peirce

A theory of statistical inference was developed by Charles S. Peirce in “Illustrations of the
Logic of Science” (1877–1878) and “A Theory of Probable Inference” (1883), two publi-
cations that emphasized the importance of randomization-based inference in statistics.
Randomized Experiments
Charles S. Peirce randomly assigned volunteers to a blinded, repeated-measures design
to evaluate their ability to discriminate weights. Peirce’s experiment inspired other re-
searchers in psychology and education, which developed a research tradition of ran-
domized experiments in laboratories and specialized textbooks in the 1800s.
Optimal Designs for Regression Models

Charles S. Peirce also contributed the first English-language publication on an optimal
design for regression models in 1876. A pioneering optimal design for polynomial re-
gression was suggested by Gergonne in 1815. In 1918 Kirstine Smith published optimal
designs for polynomials of degree six (and less).
Sequences of Experiments
The use of a sequence of experiments, where the design of each may depend on the

results of previous experiments, including the possible decision to stop experimenting,

is within the scope of Sequential analysis, a field that was pioneered by Abraham Wald
in the context of sequential tests of statistical hypotheses. Herman Chernoff wrote an
overview of optimal sequential designs, while adaptive designs have been surveyed by
S. Zacks. One specific type of sequential design is the “two-armed bandit”, generalized
to the multi-armed bandit, on which early work was done by Herbert Robbins in 1952.
Fisher’s Principles
WT Ronald Fisher
A methodology for designing experiments was proposed by Ronald Fisher, in his in-
novative books: The Arrangement of Field Experiments (1926) and The Design of Ex-
periments (1935). Much of his pioneering work dealt with agricultural applications of
statistical methods. As a mundane example, he described how to test the lady tasting
tea hypothesis, that a certain lady could distinguish by flavour alone whether the milk
or the tea was first placed in the cup. These methods have been broadly adapted in the
physical and social sciences, are still used in agricultural engineering and differ from
the design and analysis of computer experiments.
Comparison
In some fields of study it is not possible to have independent measurements

to a traceable metrology standard. Comparisons between treatments are much
more valuable and are usually preferable, and often compared against a scien-
tific control or traditional treatment that acts as baseline.
Randomization
Random assignment is the process of assigning individuals at random to groups
or to different groups in an experiment, so that each individual of the population
has the same chance of becoming a participant in the study. The random assign-
ment of individuals to groups (or conditions within a group) distinguishes a rigor-
ous, “true” experiment from an observational study or “quasi-experiment”. There

is an extensive body of mathematical theory that explores the consequences of

making the allocation of units to treatments by means of some random mecha-
nism such as tables of random numbers, or the use of randomization devices such
as playing cards or dice. Assigning units to treatments at random tends to miti-
gate confounding, which makes effects due to factors other than the treatment to
appear to result from the treatment. The risks associated with random allocation
(such as having a serious imbalance in a key characteristic between a treatment
group and a control group) are calculable and hence can be managed down to an
acceptable level by using enough experimental units. However, if the population
is divided into several subpopulations that somehow differ, and the research re-
quires each subpopulation to be equal in size, stratified sampling can be used.
In that way, the units in each subpopulation are randomized, but not the whole
sample. The results of an experiment can be generalized reliably from the exper-
imental units to a larger statistical population of units only if the experimental
WT
units are a random sample from the larger population; the probable error of such
an extrapolation depends on the sample size, among other things.
Statistical replication
Measurements are usually subject to variation and measurement uncertainty; thus
they are repeated and full experiments are replicated to help identify the sources
of variation, to better estimate the true effects of treatments, to further strengthen
the experiment’s reliability and validity, and to add to the existing knowledge of
the topic. However, certain conditions must be met before the replication of the
experiment is commenced: the original research question has been published in a
peer-reviewed journal or widely cited, the researcher is independent of the original
experiment, the researcher must first try to replicate the original findings using the
original data, and the write-up should state that the study conducted is a replication
study that tried to follow the original study as strictly as possible.
Blocking
Blocking is the arrangement of experimental units into groups (blocks/lots)
consisting of units that are similar to one another. Blocking reduces known but
irrelevant sources of variation between units and thus allows greater precision
in the estimation of the source of variation under study.
Orthogonality
Orthogonality concerns the forms of comparison (contrasts) that can be legiti-

mately and efficiently carried out. Contrasts can be represented by vectors and
sets of orthogonal contrasts are uncorrelated and independently distributed if
the data are normal. Because of this independence, each orthogonal treatment
provides different information to the others. If there are T treatments and T – 1
orthogonal contrasts, all the information that can be captured from the experi-
ment is obtainable from the set of contrasts.

Example of orthogonal factorial design
Factorial experiments
Use of factorial experiments instead of the one-factor-at-a-time method. These

are efficient at evaluating the effects and possible interactions of several factors
(independent variables). Analysis of experiment design is built on the founda-
WT
tion of the analysis of variance, a collection of models that partition the ob-
served variance into components, according to what factors the experiment
must estimate or test.
Example
This example is attributed to Harold Hotelling. It conveys some of the flavor of those
aspects of the subject that involve combinatorial designs.
Weights of eight objects are measured using a pan balance and set of standard weights.
Each weighing measures the weight difference between objects in the left pan vs. any
objects in the right pan by adding calibrated weights to the lighter pan until the balance
is in equilibrium. Each measurement has a random error. The average error is zero; the
standard deviations of the probability distribution of the errors is the same number σ
on different weighings; errors on different weighings are independent. Denote the true
weights by
θ1 , …, θ8 .

We consider two different experiments:
1. Weigh each object in one pan, with the other pan empty. Let Xi be the measured
weight of the object, for i = 1, ..., 8.
2. Do the eight weighings according to the following schedule and let Yi be the
measured difference for i = 1, ..., 8:
left pan right pan

1st weighing: 1 2 3 4 5 6 7 8 (empty)
2nd: 12 38 4567
3rd: 14 58 2367
4th: 16 7 8 2345
WT
5th: 2468 13 5 7
6th: 2578 13 4 6
7th: 3478 12 5 6
8th: 3568 12 4 7
Then the estimated value of the weight θ1 is
Y + Y2 + Y3 + Y4 − Y5 − Y6 − Y7 − Y8
θˆ 1 = 1 .
8
Similar estimates can be found for the weights of the other items. For example
Y + Y2 − Y3 − Y4 + Y5 + Y6 − Y7 − Y8
θˆ 2 = 1 .
8
Y + Y2 − Y3 − Y4 − Y5 − Y6 + Y7 + Y8
θˆ 3 = 1 .
8
Y − Y2 + Y3 − Y4 + Y5 − Y6 + Y7 − Y8
θˆ 4 = 1 .
8
Y − Y2 + Y3 − Y4 − Y5 + Y6 − Y7 + Y8
θˆ 5 = 1 .
8
Y − Y2 − Y3 + Y4 + Y5 − Y6 − Y7 + Y8
θˆ 6 = 1 .
8
Y − Y2 − Y3 + Y4 − Y5 + Y6 + Y7 − Y8
θˆ 7 = 1 .
8

Y + Y2 + Y3 + Y4 + Y5 + Y6 + Y7 + Y8
θˆ 8 = 1 .
8
The question of design of experiments is: which experiment is better?
The variance of the estimate X1 of θ1 is σ2 if we use the first experiment. But if we use the
second experiment, the variance of the estimate given above is σ2/8. Thus the second
experiment gives us 8 times as much precision for the estimate of a single item, and es-
timates all items simultaneously, with the same precision. What the second experiment
achieves with eight would require 64 weighings if the items are weighed separately.
However, note that the estimates for the items obtained in the second experiment have
errors that correlate with each other.
Many problems of the design of experiments involve combinatorial designs, as in this
WT
example and others.
Avoiding False Positives

False positive conclusions, often resulting from the pressure to publish or the author’s
own confirmation bias, are an inherent hazard in many fields. A good way to prevent
biases potentially leading to false positives in the data collection phase is to use a
double-blind design. When a double-blind design is used, participants are randomly
assigned to experimental groups but the researcher is unaware of what participants
belong to which group. Therefore, the researcher can not affect the participants’ re-
sponse to the intervention. Experimental designs with undisclosed degrees of freedom
are a problem. This can lead to conscious or unconscious “p-hacking”: trying multiple
things until you get the desired result. It typically involves the manipulation - perhaps
unconsciously - of the process of statistical analysis and the degrees of freedom until
they return a figure below the p<.05 level of statistical significance. So the design of the
experiment should include a clear statement proposing the analyses to be undertaken.
P-hacking can be prevented by preregistering researches, in which researchers have to
send their data analysis plan to the journal they wish to publish their paper in before
they even start their data collection, so no data manipulation is possible. Another way
to prevent this is taking the double-blind design to the data-analysis phase, where the
data are sent to a data-analyst unrelated to the research who scrambles up the data so
there is no way to know which participants belong to before they are potentially taken
away as outliers.
Clear and complete documentation of the experimental methodology is also important

in order to support replication of results.
Discussion Topics when Setting up an Experimental Design

An experimental design or randomized clinical trial requires careful consideration of

several factors before actually doing the experiment. An experimental design is the lay-
ing out of a detailed experimental plan in advance of doing the experiment. Some of the
following topics have already been discussed in the principles of experimental design
section:
1. How many factors does the design have, and are the levels of these factors fixed
or random?
2. Are control conditions needed, and what should they be?
3. Manipulation checks; did the manipulation really work?
4. What are the background variables?
5. What is the sample size. How many units must be collected for the experiment
to be generalisable and have enough power?
WT
6. What is the relevance of interactions between factors?
7. What is the influence of delayed effects of substantive factors on outcomes?
8. How do response shifts affect self-report measures?
9. How feasible is repeated administration of the same measurement instruments
to the same units at different occasions, with a post-test and follow-up tests?
10. What about using a proxy pretest?
11. Are there lurking variables?
12. Should the client/patient, researcher or even the analyst of the data be blind to
conditions?
13. What is the feasibility of subsequent application of different conditions to the
same units?
14. How many of each control and noise factors should be taken into account?
The independent variable of a study often has many levels or different groups. In a
true experiment, researchers can have an experimental group, which is where their
intervention testing the hypothesis is implemented, and a control group, which has all
the same element as the experimental group, without the interventional element. Thus,
when everything else except for one intervention is held constant, researchers can cer-
tify with some certainty that this one element is what caused the observed change. In
some instances, having a control group is not ethical. This is sometimes solved using
two different experimental groups. In some cases, independent variables cannot be
manipulated, for example when testing the difference between two groups who have
a different disease, or testing the difference between genders (obviously variables that
would be hard or unethical to assign participants to). In these cases, a quasi-experi-
mental design may be used.

Causal Attributions
In the pure experimental design, the independent (predictor) variable is manipulat-
ed by the researcher - that is - every participant of the research is chosen randomly
from the population, and each participant chosen is assigned randomly to condi-
tions of the independent variable. Only when this is done is it possible to certify
with high probability that the reason for the differences in the outcome variables
are caused by the different conditions. Therefore, researchers should choose the
experimental design over other design types whenever possible. However, the na-
ture of the independent variable does not always allow for manipulation. In those
cases, researchers must be aware of not certifying about causal attribution when
their design doesn’t allow for it. For example, in observational designs, participants
are not assigned randomly to conditions, and so if there are differences found in
outcome variables between conditions, it is likely that there is something other than
WT
the differences between the conditions that causes the differences in outcomes, that
is - a third variable. The same goes for studies with correlational design. (Adér &
Mellenbergh, 2008).
Statistical Control
It is best that a process be in reasonable statistical control prior to conducting designed
experiments. When this is not possible, proper blocking, replication, and randomiza-
tion allow for the careful conduct of designed experiments. To control for nuisance
variables, researchers institute control checks as additional measures. Investigators
should ensure that uncontrolled influences (e.g., source credibility perception) do not
skew the findings of the study. A manipulation check is one example of a control check.
Manipulation checks allow investigators to isolate the chief variables to strengthen
support that these variables are operating as planned.
One of the most important requirements of experimental research designs is the ne-
cessity of eliminating the effects of spurious, intervening, and antecedent variables.
In the most basic model, cause (X) leads to effect (Y). But there could be a third vari-
able (Z) that influences (Y), and X might not be the true cause at all. Z is said to be a
spurious variable and must be controlled for. The same is true for intervening vari-
ables (a variable in between the supposed cause (X) and the effect (Y)), and anteced-
ing variables (a variable prior to the supposed cause (X) that is the true cause). When
a third variable is involved and has not been controlled for, the relation is said to be
a zero order relationship. In most practical applications of experimental research de-
signs there are several causes (X1, X2, X3). In most designs, only one of these causes
is manipulated at a time.
Experimental Designs After Fisher

Some efficient designs for estimating several main effects were found independently

and in near succession by Raj Chandra Bose and K. Kishen in 1940 at the Indian Statis-
tical Institute, but remained little known until the Plackett-Burman designs were pub-
lished in Biometrika in 1946. About the same time, C. R. Rao introduced the concepts
of orthogonal arrays as experimental designs. This concept played a central role in the
development of Taguchi methods by Genichi Taguchi, which took place during his visit
to Indian Statistical Institute in early 1950s. His methods were successfully applied and
adopted by Japanese and Indian industries and subsequently were also embraced by
US industry albeit with some reservations.
In 1950, Gertrude Mary Cox and William Gemmell Cochran published the book Exper-
imental Designs, which became the major reference work on the design of experiments
for statisticians for years afterwards.
Developments of the theory of linear models have encompassed and surpassed the cas-
WT
es that concerned early writers. Today, the theory rests on advanced topics in linear
algebra, algebra and combinatorics.
As with other branches of statistics, experimental design is pursued using both fre-
quentist and Bayesian approaches: In evaluating statistical procedures like experimen-
tal designs, frequentist statistics studies the sampling distribution while Bayesian sta-
tistics updates a probability distribution on the parameter space.
Some important contributors to the field of experimental designs are C. S. Peirce,

R. A. Fisher, F. Yates, C. R. Rao, R. C. Bose, J. N. Srivastava, Shrikhande S. S., D.
Raghavarao, W. G. Cochran, O. Kempthorne, W. T. Federer, V. V. Fedorov, A. S. He-
dayat, J. A. Nelder, R. A. Bailey, J. Kiefer, W. J. Studden, A. Pázman, F. Pukelsheim,
D. R. Cox, H. P. Wynn, A. C. Atkinson, G. E. P. Box and G. Taguchi. The textbooks
of D. Montgomery and R. Myers have reached generations of students and practi-
tioners.
Human Participant Constraints

Laws and ethical considerations preclude some carefully designed experiments with
human subjects. Legal constraints are dependent on jurisdiction. Constraints may in-
volve institutional review boards, informed consent and confidentiality affecting both
clinical (medical) trials and behavioral and social science experiments. In the field of
toxicology, for example, experimentation is performed on laboratory animals with the
goal of defining safe exposure limits for humans. Balancing the constraints are views
from the medical field. Regarding the randomization of patients, “... if no one knows
which therapy is better, there is no ethical imperative to use one therapy or another.”
(p 380) Regarding experimental design, “...it is clearly not ethical to place subjects at
risk to collect data in a poorly designed study when this situation can be easily avoid-
ed...”. (p 393)

Quality Function Deployment

Quality function deployment (QFD) is a method developed in Japan beginning in 1966
to help transform the voice of the customer [VOC] into engineering characteristics for
a product. Yoji Akao, the original developer, described QFD as a “method to transform
qualitative user demands into quantitative parameters, to deploy the functions forming
quality, and to deploy methods for achieving the design quality into subsystems and
component parts, and ultimately to specific elements of the manufacturing process.”
The author combined his work in quality assurance and quality control points with
function deployment used in value engineering.
House of Quality
WT
A house of quality for enterprise product development processes
The house of quality, a part of QFD, identifies and classifies customer desires, identifies
the importance of those desires, identifies engineering characteristics which may be rel-
evant to those desires, correlates the two, allows for verification of those correlations,
and then assigns objectives and priorities for the system requirements. This process
can be applied at any system composition level (e.g. system, subsystem, or component)
in the design of a product, and can allow for assessment of different abstractions of a
system. The house of quality appeared in 1972 in the design of an oil tanker by Mitsub-
ishi Heavy Industries.
The output of the house of quality is generally a matrix with customer desires on one
dimension and correlated nonfunctional requirements on the other dimension. The
cells of matrix table are filled with the weights assigned to the stakeholder character-
istics where those characteristics are affected by the system parameters across the top
of the matrix. At the bottom of the matrix, the column is summed, which allows for
the system characteristics to be weighted according to the stakeholder characteristics.

System parameters not correlated to stakeholder characteristics may be unnecessary

to the system design and are identified by empty matrix columns, while stakeholder
characteristics (identified by empty rows) not correlated to system parameters indicate
“characteristics not address by the design parameters”. System parameters and stake-
holder characteristics with weak correlations potentially indicate missing information,
while matrices with “too many correlations” indicate that the stakeholder needs may
need to be refined.
Areas of Application
QFD is applied in a wide variety of services, consumer products, and military needs.
Fuzziness
WT
The concepts of fuzzy logic have been applied to QFD (“Fuzzy QFD” or “FQFD”). A
review of 70 papers in 2013 by Abdolshah and Moradi found a number of conclusions:
most FQFD “studies were focused on quantitative methods” to construct a house of
quality matrix based on customer requirements, where the most-employed techniques
were based on multiple-criteria decision analysis methods. They noted that there are
factors other than the house of quality relevant to product development, and called
metaheuristic methods “a promising approach for solving complicated problems of
FQFD.”
Derived Techniques and Tools

Pugh concept selection can be used in coordination with QFD to select a promising
product or service configuration from among listed alternatives.
Modular function deployment uses QFD to establish customer requirements and

to identify important design requirements with a special emphasis on modularity.
There are three main differences to QFD as applied in modular function deploy-
ment compared to house of quality: The benchmarking data is mostly gone; the
checkboxes and crosses have been replaced with circles, and the triangular “roof”
is missing.
Quantitative Marketing Research

Quantitative marketing research is the application of quantitative research techniques
to the field of marketing. It has roots in both the positivist view of the world, and the
modern marketing viewpoint that marketing is an interactive process in which both the
buyer and seller reach a satisfying agreement on the “four Ps” of marketing: Product,
Price, Place (location) and Promotion.

As a social research method, it typically involves the construction of questionnaires and

scales. People who respond (respondents) are asked to complete the survey. Marketers
use the information to obtain and understand the needs of individuals in the market-
place, and to create strategies and marketing plans.
Typical General Procedure

Simply put, there are five major and important steps involved in the research process:
1. Defining the problem.
2. Research design.
3. Data collection.
4. Data analysis.
WT
5. Report writing & presentation.
A brief discussion on these steps is:

1. Problem audit and problem definition - What is the problem? What are the var-
ious aspects of the problem? What information is needed?
2. Conceptualization and operationalization - How exactly do we define the con-
cepts involved? How do we translate these concepts into observable and mea-
surable behaviours?
3. Hypothesis specification - What claim(s) do we want to test?
4. Research design specification - What type of methodology to use? - examples:
questionnaire, survey
5. Question specification - What questions to ask? In what order?
6. Scale specification - How will preferences be rated?
7. Sampling design specification - What is the total population? What sample size
is necessary for this population? What sampling method to use?- examples:
Probability Sampling:- (cluster sampling, stratified sampling, simple random
sampling, multistage sampling, systematic sampling) & Nonprobability sam-
pling:- (Convenience Sampling,Judgement Sampling, Purposive Sampling,
Quota Sampling, Snowball Sampling, etc. )
8. Data collection - Use mail, telephone, internet, mall intercepts
9. Codification and re-specification - Make adjustments to the raw data so it is

compatible with statistical techniques and with the objectives of the research
- examples: assigning numbers, consistency checks, substitutions, deletions,
weighting, dummy variables, scale transformations, scale standardization

10. Statistical analysis - Perform various descriptive and inferential techniques on

the raw data. Make inferences from the sample to the whole population. Test
the results for statistical significance.
11. Interpret and integrate findings - What do the results mean? What conclusions
can be drawn? How do these findings relate to similar research?
12. Write the research report - Report usually has headings such as: 1) executive
summary; 2) objectives; 3) methodology; 4) main findings; 5) detailed charts
and diagrams. Present the report to the client in a 10-minute presentation. Be
prepared for questions.
The design step may involve a pilot study in order to discover any hidden issues. The
codification and analysis steps are typically performed by computer, using statistical
software. The data collection steps, can in some instances be automated, but often re-
WT
quire significant manpower to undertake. Interpretation is a skill mastered only by
experience.
Statistical Analysis
The data acquired for quantitative marketing research can be analysed by almost any
of the range of techniques of statistical analysis, which can be broadly divided into
descriptive statistics and statistical inference. An important set of techniques is that
related to statistical surveys. In any instance, an appropriate type of statistical analysis
should take account of the various types of error that may arise, as outlined below.
Reliability and Validity

Research should be tested for reliability, generalizability, and validity.
Generalizability is the ability to make inferences from a sample to the population.
Reliability is the extent to which a measure will produce consistent results.
• Test-retest reliability checks how similar the results are if the research is re-
peated under similar circumstances. Stability over repeated measures is as-
sessed with the Pearson coefficient.
• Alternative forms reliability checks how similar the results are if the research
is repeated using different forms.
• Internal consistency reliability checks how well the individual measures includ-
ed in the research are converted into a composite measure. Internal consistency
may be assessed by correlating performance on two halves of a test (split-half
reliability). The value of the Pearson product-moment correlation coefficient is
adjusted with the Spearman–Brown prediction formula to correspond to the

correlation between two full-length tests. A commonly used measure is Cron-

bach’s α, which is equivalent to the mean of all possible split-half coefficients.
Reliability may be improved by increasing the sample size.
Validity asks whether the research measured what it intended to.

• Content validation (also called face validity) checks how well the content of the
research are related to the variables to be studied; it seeks to answer whether
the research questions are representative of the variables being researched. It
is a demonstration that the items of a test are drawn from the domain being
measured.
• Criterion validation checks how meaningful the research criteria are relative to
other possible criteria. When the criterion is collected later the goal is to estab-
lish predictive validity.
WT
• Construct validation checks what underlying construct is being measured.
There are three variants of construct validity: convergent validity (how well
the research relates to other measures of the same construct), discriminant
validity (how poorly the research relates to measures of opposing constructs),
and nomological validity (how well the research relates to other variables as
required by theory).
• Internal validation, used primarily in experimental research designs, checks
the relation between the dependent and independent variables (i.e. Did the
experimental manipulation of the independent variable actually cause the ob-
served results?)
• External validation checks whether the experimental results can be general-
ized.
Validity implies reliability: A valid measure must be reliable. Reliability does not neces-
sarily imply validity, however: A reliable measure does not imply that it is valid.
Types of Errors
Random sampling errors:
• sample too small
• sample not representative
• inappropriate sampling method used
• random errors
Research design errors:
• bias introduced

• measurement error
• data analysis error
• sampling frame error
• population definition error
• scaling error
• question construction error
Interviewer errors:
• recording errors
WT
• cheating errors
• questioning errors
• respondent selection error
Respondent errors:
• non-response error
• inability error
• falsification error
Hypothesis errors:
• type I error (also called alpha error)
o the study results lead to the rejection of the null hypothesis even though it
is actually true
• type II error (also called beta error)
o the study results lead to the acceptance (non-rejection) of the null hypothe-
sis even though it is actually false
References
• Rose, Kenneth H. (July 2005). Project Quality Management: Why, What and How. Fort Lauder-
dale, Florida: J. Ross Publishing. p. 41. ISBN 1-932159-48-7
• Anton, Doug; Carole Anton (2006). ISO 9001 Survival Guide, Third Edition. AEM Consulting
Group, Inc. p. 100. ISBN 978-0-9672170-8-6
• Tricker, Ray; Bruce Sherring-Lucas (2005). ISO 9001:2008 In Brief, Second Edition. Butter-
worth-Heinemann. p. 192. ISBN 978-0-7506-6616-9

• Dobb, Fred (2004). ISO 9001:2000 Quality Registration Step-by-Step, Third Edition. Butter-
worth-Heinemann. p. 292. ISBN 978-0-7506-4949-0
• Heras, Iñaki; Dick, Gavin P.M.; Casadesús, Martí (2002). “ISO 9000 registration’s impact on sales
and profitability: A longitudinal analysis of performance before and after accreditation”. Interna-
tional Journal of Quality & Reliability Management. 19 (6): 774. doi:10.1108/02656710210429618
• Dalgleish, Scott (5 May 2003). “Probing the Limits - ISO 9000: More Hindrance Than Help”.
Quality Magazine. Retrieved 10 June 2015
• Poksinska, Bozena; Dahlgaard, Jens Jörn; Antoni, Marc (2002). “The state of ISO
9000 certification: A study of Swedish organizations”. The TQM Magazine. 14 (5): 297.
doi:10.1108/09544780210439734
• Sroufe, Robert and Sime Curkovic, “An examination of ISO 9000:2000 and supply chain quality
assurance.” Journal of Operations Management, Volume 26, Issue 4, July 2008, Pages 503-520
• Stewart, Greg L.; Manges, Kirstin A.; Ward, Marcia M. “Empowering Sustained Patient Safety”.
Journal of Nursing Care Quality. 30 (3): 240–246. doi:10.1097/ncq.0000000000000103
WT
• Deng, H.; Runger, G.; Tuv, E. (2012). “System monitoring with real-time contrasts”. Journal of
Quality Technology. 44 (1). pp. 9–27
• “A Brief History of ISO 9000: Where did we go wrong?”. The Case Against ISO 9000 (2nd ed.).
Oak Tree Press. 2000. ISBN 978-1-86076-173-7
• Poksinska, Bozena; Dahlgaard, Jens Jörn; Antoni, Marc (2002). “The state of ISO
9000 certification: A study of Swedish organizations”. The TQM Magazine. 14 (5): 297.
doi:10.1108/09544780210439734
• Wheeler, Donald J. (1 November 2010). “Are You Sure We Don’t Need Normally Distributed
Data?”. Quality Digest. Retrieved 7 December 2010
• Prause, Christian; Bibus, Markus; Dietrich, Carsten; Jobi, Wolfgang (2016). “Software Product
Assurance at the German Space Agency”. Journal of Software: Evolution and Process. 28 (9):
744–761
• Naveh, Eitan; Marcus, Alfred (2007). “Financial performance, ISO 9000 standard and safe driv-
ing practices effects on accident rate in the U.S. Motor carrier industry”. Accident Analysis &
Prevention. 39 (4): 731. doi:10.1016/j.aap.2006.11.004
• Haridy, Salah; Maged, Ahmed; Kaytbay, Saleh; Araby, Sherif (2016-09-19). “Effect of sample size
on the performance of Shewhart control charts”. The International Journal of Advanced Manu-
facturing Technology: 1–9. ISSN 0268-3768. doi:10.1007/s00170-016-9412-8
• Rajan, Murli; Tamimi, Nabil (2003). “Payoff to ISO 9000 Registration”. The Journal of Investing.
12: 71. doi:10.3905/joi.2003.319536
• “BSI obtains first global accreditation from ANAB to certify organizations to the new Quality
Management standard ISO 9001:2015”. BSI. Retrieved 4 September 2015
• Chow-Chua, Clare; Goh, Mark; Wan, Tan Boon (2003). “Does ISO 9000 certification improve
business performance?”. International Journal of Quality & Reliability Management. 20 (8): 936.
doi:10.1108/02656710310493643
• Alcorn, Janice E. (2008). “The Benefits of ISO 9000 Certification”. A Collection of Papers Pre-
sented at the 55th Conference on Glass Problems: Ceramic Engineering and Science Proceedings.
Ceramic Engineering and Science Proceedings. 16 (2): 15. ISBN 978-0-470-31466-1

6
Diverse Aspects of Lean Six Sigma
There are many other processes that seek to eliminate waste. They have developed to solve
challenges of modern business processes. Some of the themes discussed in this section
include lean dynamics, lean thinking, computer-aided lean management, etc. Lean six sig-
ma is best understood in confluence with the major topics listed in the following chapter.
WT
Lean Dynamics
Lean dynamics is a business management practice that emphasizes the same primary
outcome as lean manufacturing or lean production of eliminating wasteful expenditure
of resources. However, it is distinguished by its different focus of creating a structure
for accommodating the dynamic business conditions that cause these wastes to accu-
mulate in the first place.
Like lean manufacturing, lean dynamics is a variation on the theme of creating effi-
ciencies and greater value by optimizing flow rather than by maximizing economies
of scale. As such, it represents an important chapter in the broader discussion of Tay-
lorism, Fordisim, Alfred Sloan’s standard volume methodology, Peter Drucker’s philos-
ophy on the “theory of the business” and Genichi Taguchi’s analysis of loss. Its general
philosophy has grown in popularity over recent years, in large part because of the in-
creasingly challenging circumstances faced by the global business world (particularly
evident during the 2008–2009 worldwide economic downturn.)
This need to create greater efficiencies while competing in an environment that de-
mands constant change and innovation seems to be responsible for the emergence of
lean dynamics as a recognized business improvement approach.
Overview
The term “lean” was first coined by a researcher at MIT and later popularized by the
best-selling book, The Machine that Changed the World (1990). Those implementing
lean principles generally focus on applying lean tools which have been described in
a number of references over the past two decades with the focus of seeking out and
directly targeting “waste” (its seven forms described by Taiichi Ohno in Toyota Produc-
tion System are well known.) This emphasis can result in greater efficiencies that do
not necessarily respond well when business conditions shift.

Diverse Aspects of Lean Six Sigma 211
Lean dynamics takes a different approach. Introduced by the book, Going Lean, it
does not directly target the desired outcome of waste elimination; instead, it focus-
es on identifying and addressing sources of “lag”, or imbedded disconnects in flowing
value through operations, decision-making, information, and innovation that lead to
workarounds and amplify disruption when business conditions change. It promotes a
different way of structuring the business that creates an inherent “dynamic stability”
or greater responsiveness for accommodating shifting business conditions. Companies
that are structured in this way show dramatically greater customer value as measured
by their quality, innovation, and customer satisfaction; they also sustain greater corpo-
rate value as measured by profitability, market capitalization, and growth.
Lean dynamics uses the value curve as a data-driven way of directly comparing compa-
nies to distinguish lean firms from other industries.
WT
Implementation of lean dynamics focuses on driving down the impact that variation
has on loss (based on the loss function from the Taguchi methods often described by
the famous business statistician W. Edwards Deming), a concept describing the dra-
matic reduction of value-creating capabilities that traditional management systems
display when subjected to sudden shifts in product demand, energy prices, or other
conditions that affect operational stability or predictability.
Lean dynamics is particularly versatile in that it can be applied to a wide range of man-
ufacturing and service industries. Its methods have been studied for Aerospace and
Defense (particularly as applied to procuring hard to get spare parts), and medical, and
distinguishes the few that stand out during crisis such as airlines, and retail.
Background
Lean dynamics has its roots in a global study of lean manufacturing in the aerospace in-
dustry aimed at understanding how to break its cycle of cost escalation that was making
new products unaffordable. These results were described in the Shingo Prize winning
book, Breaking the Cost Barrier. This study showed that directly targeting “waste” re-
duction as the focal point for lean programs does not lead to significant cost savings.
Instead, it provided strong evidence that emphasis should be placed on applying lean
principles to mitigate the amplification of variation that causes workarounds. Address-
ing this variation was critical to overcoming the disruption that often causes waste to
accumulate in the first place. Other sources cited this, identifying occurrences across
other industries.
Subsequent research of the aerospace industry showed that firms had accepted these
findings, describing this approach of Variation Management as “...one of the most prom-
inent approaches to transforming and improving military enterprise performance.”
This phenomenon was validated by correlating the disruption caused by variation in

flow (measured as cycle time variation) with “loss” as described by the Taguchi Loss

Function. Sudden changes in business conditions, such as spikes or decreases in pro-

duction demand, cause increases in variation from forecasted conditions, causing dis-
ruption, and causing waste to accumulate. A lean dynamics approach restructures the
way operations, organizations, information, and innovation are structured to overcome
this.
One method for companies to deal internally with externally driven variation (such as
sudden spikes in demand), a core tenet of lean dynamics, was explored by the Defense
Department under the Supplier Utilization through Responsive Grouped Enterprises
(SURGE) Program. The SURGE program was partially sponsored by the Joint Strike
Fighter Program (JSF)(F-35 Lightning II) This program aimed to reduce factory dis-
ruption due to demand variation by grouping parts together that shared similar man-
ufacturing processes. It succeeded in reducing lead time on a number of critical aero-
space items by as much as 60%. The SURGE program gained notoriety when it was
WT
mentioned on the popular TV Show JAG.
Lean Thinking
Lean thinking is a business methodology that aims to provide a new way to think about
how to organize human activities to deliver more benefits to society and value to indi-
viduals while eliminating waste. The term lean thinking was coined by James P. Wom-
ack and Daniel T. Jones to capture the essence of their in-depth study of Toyota’s fabled
Toyota Production System. Lean thinking is a new way of thinking any activity and see-
ing the waste inadvertently generated by the way the process is organized by focusing
on the concepts of:
1. Value,
2. Value streams,
3. Flow,
4. Pull,
5. Perfection.
The aim of lean thinking is to create a lean enterprise, one that sustains growth by
aligning customer satisfaction with employee satisfaction, and that offers innovative
products or services profitably while minimizing unnecessary over-costs to customers,
suppliers and the environment. The basic insight of lean thinking is that if you train ev-
ery person to identify wasted time and effort in their own job and to better work togeth-
er to improve processes by eliminating such waste, the resulting enterprise will deliver
more value at less expense while developing every employee’s confidence, competence
and ability to work with others.

The idea of lean thinking gained popularity in the business world and has evolved in
two different directions:
1. Lean thinking converts who keep seeking to understand how to seek dynamic
gains rather than static efficiencies. For this group of thinkers, lean thinking
continuously evolves as they seek to better understand the possibilities of the
way opened up by Toyota and have grasped the fact that the aim of continuous
improvement is continuous improvement. Lean thinking as such is a movement
of practitioners and writers who experiment and learn in different industries
and conditions, to lean think any new activity.
2. Lean manufacturing adepts who have interpreted the term “lean” as a form of
operational excellence and have turned to company programs aimed at taking
costs out of processes. Lean activities are used to improve processes without
WT
ever challenging the underlying thinking, with powerful low-hanging fruit re-
sults but little hope of transforming the enterprise as a whole. This “corporate
lean” approach is fundamentally opposed to the ideals of lean thinking, but has
been taken up by a great number of large businesses seeking to cut their costs
without challenging their fundamental management assumptions.
Overview
Lean thinking was born out of studying the rise of Toyota Motor Company from a bank-
rupt Japanese automaker in the early 1950s to today’s dominant global player. At ev-
ery stage of its expansion, Toyota remained a puzzle by capturing new markets with
products deemed relatively unattractive and with systematically lower costs while not
following any of the usual management dictates. In studying the company firsthand it
appeared that it had a unique group of elders (sensei) and coordinators (trainers from
Japan) dedicated to help managers think differently. Contrarily to every other large
company, Toyota’s training in its formative years was focused on developing people’s
reasoning abilities rather than pushing them to execute specialist-derived systems.
These “sensei”, or masters in lean thinking would challenge line managers to look dif-
ferently at their own jobs by focusing on:
1. The workplace: Going and seeing firsthand work conditions in practice, right
now, and finding out the facts for oneself rather than relying on reports and
boardroom meeting. The workplace is also where real people make real value
and going to see is a mark of respect and the opportunity to support employees
to add value through their ideas and initiative more than merely make value
through prescribed work. The management revolution brought by lean thinking
can be summed up by describing jobs in terms of Job = Work + Kaizen
2. Value through built-in quality: Understanding that customer satisfaction is par-

amount and is built-in at every step of the enterprise’s process, from building

in satisfying features (such as peace of mind) to correctly building in quality at

every production step. Built-in quality means to stop at every doubtful part and
to train yourself and others not to pass on defective work, not to do defective
work and not to accept defective work by stopping the process and reacting im-
mediately whenever things go wrong.
3. Value streams through understanding “takt” time: By calculating the ratio of

open production time to averaged customer demand one can have a clear idea
of the capacity needed to offer a steady flow of products. This “takt” rhythm,
be it a minute for cars, two months for software projects or two years for a new
book leads to creating stable value streams where stable teams work on a stable
set of products with stable equipment rather than optimize the use of specific
machines or processes. Takt time thinking leads to completely different capaci-
ty reasoning than traditional costing and is the key to far more frugal processes.
WT
4. Flow through reducing batch sizes: Every traditional business, whether in pro-
duction or services, is addicted to batch. The idea as that once work is set up one
way, we’d better get on and quickly make as many pieces of work as we can to
keep the unit cost down. Lean thinking looks at this differently in trying to opti-
mize the flow of work in order to satisfy real demand now, not imaginary demand
next month. By working strenuously on reducing change-over time and difficulty,
it is possible to approach the lean thinking ideal of single piece flow. In doing so,
one reduces dramatically the general cost of the business by eliminating the need
for warehouses, transports, systems, subcontractor use and so on.
5. Pull to visualize takt time through the flow: pulling work from upstream at takt time
through visual devices such as Kanban cards is the essential piece that enables lean
thinkers to visualize the gaps between the ideal and the actual at the workplace at
any time. Pull is what creates a creative tension in the workplace by both edging
closer to single-piece-work and by highlighting problems one at a time as they oc-
cur so complex situations can be resolved piecemeal. Pull is the basic technique to
“lean” the company and, by and large, without pull there is no lean thinking.
6. Seeking perfection through kaizen: The old time sensei used to teach that the
aim of lean thinking was not to apply lean tools to every process, but to devel-
op the kaizen spirit in every employee. Perfection is not sought through bet-
ter, more clever systems or go-it-alone heroes but through a commitment to
improve things together step-by-small-step. Kaizen literally means change for
the better and Kaizen spirit is about seeking a hundred 1% improvements from
every one every day every where rather than one 100% leap forward. The prac-
tice of kaizen is what anchors deep lean thinking in people’s minds and which,
ultimately, leads to complete transformation. Practicing kaizen together builds
self-confidence and the collective confidence that we can face our larger chal-
lenges and solve our problems together.

Lean Thinking Practices

Experience shows that adopting lean thinking requires abandoning deeply engrained
mainstream management thought routines, and this is never easy. The three main ways
to adopt lean thinking are, unsurprisingly:
1. “Aha!” moments by seeing someone behave in a striking way, or hitting upon a

new idea by reading a book, visiting a workplace, or being beaten over the head
by an old time sensei. Aha! moments are powerful, but unfortunately rare, and
need the right conditions to occur.
2. Every day practice by the daily use of “lean” practices. These practices main-
ly originate from Toyota and are essentially “think with your hand” exercises.
Their purpose is not to implement new processes (as they are too often inter-
preted) but practical activities to lead one to see the situation differently and
WT
have new ideas about it – to adopt a leaner way of thinking.
3. Joining lean self-study groups by practicing kaizen with others and identifying
which role models one would like to follow. The lean community is now a gener-
ation strong and has many great examples to offer to any lean learner, whether
beginner or experienced. Workplace visits with experienced lean thinkers re-
mains one of the most effective ways to grasp their meaning.
In the lean thinking tradition, the teacher should not explain but demonstrate – learn-
ing is the full responsibility of the learner. However, to create the proper conditions for
learning the lean tradition has adopted a number of practices from Toyota’s own learn-
ing curve. The aim of these practices is not to improve processes per se but to create an
environment for teachable and learnable moments.
1. Kaizen activities: Whether cross-functional workshops, team quality circles,

individual suggestions, and many other exercises, kaizen activities are about
scheduled moments to improve the work within the normal working day. The
point of kaizen is that improvement is a normal part of the job, not something
to be done “when there is time left after having done everything else.” Kaizen is
scheduled, planned, and controlled by a teacher who makes sure Dr. Deming’s
Plan-Do-Check-Act is followed rigorously.
2. Kanban: Kanban is the foundational practice of lean thinking (the Toyota Pro-
duction System used to be first known as the Kanban system). Any process will
have different output. For instance, nowadays, a writer will produce books, key-
note speeches, blog posts, tweets and answer e-mails. The question is, at the
present time right now, how can the person using the process know whether
they are doing what is needed for customers right now or whether they are work-
ing ahead on something not that important and lagging behind on something
critical. In project management this creates segments ahead and segments late,

and end of project panic. In production this creates entire warehouses of in-
ventories to compensate for the inability to produce right now what is needed.
Kanban is a simple technique using cards or post-it notes to visualize “leveled”
(i.e. averaged to avoid peaks and troughs) activity at the process. The writer will
start a new book when she’s delivered one. She will worry about the new confer-
ence when it’s time to. She will write a new blog post at a steady rhythm rather
than publish five in a rush and then one and so on. In production, Kanban cards
make sure employees are working on what is needed right now and not overpro-
ducing parts which will then linger in inventory whilst others will be unavail-
able. Kanban is the main practice to reveal all misfits between today’s activities
and how the market behaves. Kanban teaches one lean thinking by constantly
challenging assumptions about market behavior and our own flexibility.
3. Autonomation: In any contemporary setting, every one uses either machines or
WT
software to do any work. Yet, this automated work still requires specific human
judgments to be done right. As a result, many machines can’t be left alone to
work because they’re likely to go wrong if someone doesn’t watch them all the
time. Autonomation is the practice of progressively imparting human judge-
ment to a system so that it self-monitors and stops and calls a human when it
feels it went wrong, just as a desktop computer will flag a virus alert if it feels
under attack. Autonomation is essential to separate people from machines and
not have humans doing machine work and vice versa. Automation teaches lean
thinking by revealing new ways of designing lighter, smarter machines with less
capital expenditure.
4. Andon: Calling out when something feels out of kilt and to visualize that call on
central board so that help can come quickly. Lean thinking is thinking together
and no employee should be left alone with a problem. Andon is a critical system
to be able to train employees in the details of their jobs within their own opera-
tions. Andon teaches lean thinking in highlighting the immediate barriers to the
lean goal of zero defect at every step of the process at all time. Through andon
it is possible to think better about training people and improving their work
conditions to take all difficulties away.
5. SMED: Originally known as Single Minute Exchange of Die (changing tools

under 10 minutes), SMED is a key lean thinking practice to focus directly on
flexibility. Flexibility is central to flow and always a problem, even for an en-
gineers’ mind – how flexible are we to move from one topic to the next? Flex-
ibility doesn’t mean changing everything all the time, but the ability to switch
quickly from one known activity to the next. SMED teaches lean thinking in
always seeking to improve flexibility until one reaches true single-piece-flow in
the right sequence to respond to instant customer demand.
6. Standardized Work: lean thinking is about seeking the smoothest flow in any

work, in order to see problems one by one and resolve them one by one, thus
improving both the flow of work and the autonomy of the person. Standardized
Work is the graphic description of this smooth flow of work at takt time with
zero or one piece of work-in-process and clear location for everything and steps.
Tricky quality points are also identified clearly, to make sure the person visual-
izes first, what is important for the customer, how to distinguish OK from not
OK at every step and have to move confidently from one step to the next. Stan-
dardized work teaches lean thinking by visualizing every obstacle to smooth
work each person encounters and highlighting topics for kaizen.
7. Visualization: most lean thinking techniques are about visualization in some

form or other so that we can see together, know together and thus learn togeth-
er. Visual control is the essential trigger to creative problem solving as all can
see the gap between what was planned and what actually happened and can
WT
seek both immediate countermeasures and root causes. Visualization teaches
lean thinking by getting people to work together on their own problems and
develop their responsibility to reaching objectives without overburden.
Controversies
There are two controversies surrounding the word “lean,” one concerning the image of
lean with the general public and the other within the lean movement itself.
Lean has repeatedly been accused of being a form of turbo-charged taylorism, the har-
binger of productivity pressure, detrimental to employee’s health and autonomy at
work. Unfortunately, some company programs calling themselves “lean” have indeed
had a severely negative effect on the business and work relations. This problem arises
when senior leaders do not seek to adopt lean thinking but instead delegate to outside
consultants or internal specialist team the job of “leaning” processes. Lean thinking
very clearly states that it seeks cost reductions – finding the policy origins of unneces-
sary costs and eliminating at the cause – and not cost cutting – forcing people to work
within reduced budgets and degraded conditions in order to achieve line by line cost
advantage. There is no doubt about this, but to many managers the latter option is
far more expedient than the former and it’s easy to call “lean” a cost cutting program.
Nonetheless, this is not that, and any approach that doesn’t have the explicit aim to
develop lean thinking in every employee should not be considered to be “lean.”
A second ongoing controversy, within the lean community itself, concerns how closely
lean thinkers should follow Toyota practices. This is a tricky subject because on the one
hand Toyota is the inventor of lean and is well ahead in both knowledge and experience
but, on the other hand, why would methods invented by a Japanese auto manufactur-
er apply anywhere else? In fact, this debate rests on the assumption that Toyota is a
monolithic company with a single unified practice. In actual terms, Toyota has changed
considerably from its 1970s roots and is now a global company with hundreds of sites

across all continents – no two sites are alike and although there are similar principles
at work, local practices vary considerably from site to site. No one comes out of any
conversation completely unchanged and, for instance, in talking to GE one comes back
GE-fied as in talking to Toyota, one comes back Toyota-fied, so to speak. This debate is
thus vital for the lean movement as confronting Toyota practices, such as they are here
and there, to other environments is the starting point of lean thinking. In this respect,
“how much like Toyota thinking should lean thinking be?” is a question without an an-
swer that merits constant, case by case consideration.
It’s about People First

These controversies largely emerge around the radical organizational innovation pro-
posed by lean thinking: putting people first rather than systems. In this, lean thinking
departs markedly from mainstream management:
WT
1. Individual customers rather than market segments: Without denying the need
to think in terms of segments, lean thinking is about taking seriously every sin-
gle customer complaint and opinion of the product or service, as a fact. The
ability to service every customer specifically is only limited by the flexibility of
the company’s process and lean thinking is about seeking a way to reach the
ideal of serving each individual’s preferences.
2. Teaching employees how to learn rather than telling them what to do: Lean
thinking’s aim is to develop each person’s autonomy in problem solving by
supporting them in their continuous improvement activities. This is a radical
break from taylorism where a group of specialists will devise the “one-best-way”
and line management will be tasked to enforce it. By contrast, lean thinking
is taught to managers so that they help their own direct reports to think lean
and reduce overburden, unneeded variation and activity waste by working more
closely with their teams and across functional boundaries.
Lean thinking at senior level creates leaner enterprises because sales increase through
customer satisfaction with higher quality products or services, because cash improve
as flexibility reduces the need for inventories or backlogs, because costs reduce through
identifying costly policies that create waste at value-adding level, and because capital
expenditure is less needed as people themselves invent smarter, leaner processes to
flow work continuously at takt time without waste.
Lean and Green

The import of lean thinking goes way beyond improving business profitability. In their
seminal book Natural Capitalism, authors Paul Hawken, Amory Lovins and L. Hunter
Lovins explicitly reference lean thinking as a way to sustain growth without so much
collateral damage for the environment. Indeed, lean thinking’s approach to seek to
eliminate waste in the form of muri (overburden), mura (unlevelness) and muda (un-

necessary resource use) is a proven practical way to attack complex problems piece
by piece through concrete action. Indeed, Toyota industrial sites are well known for
their sustainability efforts and well ahead of the “zero landfill” goal – all waste recycled
within the site. Practicing lean thinking offers a radically new way to look at traditional
goods and service production to learn how to sustain the same benefits at a much lower
cost, financially and environmentally.
Computer-aided Lean Management

Computer-aided lean management, in business management, is a methodology of de-
veloping and using software-controlled, lean systems integration. Its goal is to drive
innovation towards cost and cycle-time savings. It attempts to create an efficient use of
WT
capital and resources through the development and use of one integrated system model
to run a business’s planning, engineering, design, maintenance, and operations.
Overview
Computer-Aided Lean Management (CALM) is a management philosophy that uses
computational software in an integrated fashion to reduce risk and drive out inefficien-
cies. CALM acts on uncertainties and business inefficiencies to increase profitability
through the use of computational decision-making tools that enable opportunities for
additional value creation. It is based on the application of software to enable continu-
ous improvement through an Integrated System Model (ISM) of the business’s physical
assets, business processes, and machine learning. This unique integration of software
applications using lean principles was developed in the aerospace industry and has
migrated to the energy industry.
The creation of an integrated system model removes the barriers posed by the silos or
stovepipes inherent in the departmentalization of most companies. Integration enables
lean uses of information for the creation of actionable knowledge. CALM strives to create
such a lean management approach to running the company through the rigors of software
enforcement. From this software enforcement comes clear policy and procedures that are
adhered to, activity-based costing, measurement of effectiveness, and the capability of us-
ing advanced algorithms for dramatic improvements in optimization of resources. CALM
creates business capabilities through software to enable technology application, streamlin-
ing of processes, and a lean organizational structure. The methodology is based on a com-
monsense approach for running a business, by measuring of actions taken and using those
measurements to design improved processes in order to drive out inefficiencies.
History
CALM was inspired by lean processes and techniques that were already dominant man-

agement technologies with a wide diversity of applications and successes. Motorola and
General Electric (GE) had been known for the concepts of Six Sigma; Boeing had been
managing mass (using modular and flexible assembly options), and Toyota put it all to-
gether into a truly lean business through its Toyota Production System. Boeing in turn
took the Toyota model and added computer-aided enforcement of lean methodologies
throughout the manufacturing process.
One of the major sources for CALM’s outgrowth was integrated definition (IDEF) mod-
eling in aerospace manufacturing that was pioneered by the U.S. Air Force in the 1970s.
IDEF is a methodology designed to model the end-to-end decisions, actions, and ac-
tivities of an organization or system so that costs, performance, and cycle times can be
optimized. IDEF methods have been adapted for wider use in automotive, aerospace,
pharmaceuticals, and even software development industries. IDEF methods serve as a
starting point to understand lean management through semantic data modeling. The
WT
IDEF process begins by mapping the as-is functions of an enterprise, creating a graph-
ical model, or road map, that shows what controls each important function, who per-
forms it, what resources are required for carrying it out, what it produces, how much it
costs, and what relationships it has to other functions of the organization. IDEF simu-
lations of the to-be enterprise have been found to be efficient at streamlining and mod-
ernizing both companies and governmental agencies.
Perhaps the best-developed evolution of the IDEF model beyond Toyota was at Boeing.
Their project life-cycle process has grown into a rigorous software system that links
people, tasks, tools, materials, and the environmental impact of any newly planned
project, before any building is allowed to begin. Routinely, more than half of the time
for any given project is spent building the precedence diagrams, or three-dimension-
al process maps, integrating with outside suppliers, and designing the implementa-
tion plan-all on the computer. Once real activity is initiated, an action tracker is used
to monitor inputs and outputs versus the schedule and delivery metrics in real time
throughout the organization. When the execution of a new airplane design begins, it
is so well organized that it consistently cuts both costs and build time in half for each
successive generation of airframe. And, of course, it is paperless. Boeing created a
complex lean management process called ‘define and control airplane configuration/
manufacturing resource management’ (DCAC/MRM). The process was built with the
help of the operations research and computer sciences departments of the University of
Pittsburgh. The manufacture of the Boeing 777 was ultimately a success, and it became
the precursor to succeeding generations of CALM at Boeing. Boeing is four generations
beyond that airplane now, and they have succeeded in cutting the time and cost for
each new generation of airplane. Boeing’s successes in conversion from inefficient silos
of manufacturing to a lean and efficient operation have become legendary.
The methodology of CALM has recently been applied to field orientated infrastruc-
ture based businesses with highly interdependent systems, such as electric utilities
where a smart grid concept is being researched and developed. The management of

infrastructure-based industries like oil, gas, electricity, water, transportation, and re-
newables requires massive investments in interdependent, physical infrastructure, as
well as simultaneous attention to disparate market forces. In infrastructure businesses
that manage field assets, uncertainty is the prime impediment to profitability, rather
than the maintenance of efficient supply chains or the management of factory assem-
bly lines. These businesses are dominated by risk from uncertainties such as weather,
market variations, transportation disruptions, government actions, logistic difficulties,
geology, and asset reliability. CALM has been applied to deal with these types of infra-
structure based challenges.
Production Leveling
WT
Production leveling, also known as production smoothing or – by its Japanese origi-
nal term – heijunka, is a technique for reducing the Mura (Unevenness) which in turn
reduces muda (waste). It was vital to the development of production efficiency in the
Toyota Production System and lean manufacturing. The goal is to produce interme-
diate goods at a constant rate so that further processing may also be carried out at a
constant and predictable rate.
Where demand is constant, production leveling is easy, but where customer demand
fluctuates, two approaches have been adopted: 1) demand leveling and 2) production
leveling through flexible production.
To prevent fluctuations in production, even in outside affiliates, it is important to mini-

mize fluctuation in the final assembly line. Toyota’s final assembly line never assembles
the same automobile model in a batch. Instead, they level production by assembling a
mix of models in each batch and the batches are made as small as possible.
Production Leveling by Volume or by Product Type or Mix

Production leveling can refer to leveling by volume, or leveling by product type or mix,
although the two are closely related.
Leveling by Volume
If for a family of products that use the same production process there is a demand that
varies between 800 and 1,200 units then it might seem a good idea to produce the
amount ordered. Toyota’s view is that production systems that vary in the required
output suffer from mura and muri with capacity being ‘forced’ in some periods. So their
approach is to manufacture at the long-term average demand and carry an inventory
proportional to the variability of demand, stability of the production process and the
frequency of shipments. So for our case of 800-1,200 units, if the production process

were 100% reliable and the shipments once a week, then the production would be with
minimum standard inventory of 200 at the start of the week and 1,200 at the point of
shipment. The advantage of carrying this inventory is that it can smooth production
throughout the plant and therefore reduce process inventories and simplify operations
which reduces costs.
Leveling by Product
Most value streams produce a mix of products and therefore face a choice of production
mix and sequence. It is here that the discussions on economic order quantities take
place and have been dominated by changeover times and the inventory this requires.
Toyota’s approach resulted in a different discussion where it reduced the time and cost
of changeovers so that smaller and smaller batches were not prohibitive and lost pro-
duction time and quality costs were not significant. This meant that the demand for
WT
components could be leveled for the upstream sub-processes and therefore lead time
and total inventories reduced along the entire value stream. To simplify leveling of
products with different demand levels a related visual scheduling board known as a
heijunka box is often used in achieving these heijunka style efficiencies. Other produc-
tion leveling techniques based on this thinking have also been developed. Once leveling
by product is achieved then there is one more leveling phase, that of “Just in Sequence”
where leveling occurs at the lowest level of product production.
The use of production leveling as well as broader lean production techniques helped
Toyota massively reduce vehicle production times as well as inventory levels during the
1980s.
Implementation
Even Toyota hasn’t reached the final stage in this journey, single-piece flows, across all
of their processes; indeed they recommend following their journey rather than trying
to jump into an intermediate stage. The reason Toyota advocate this is that each pro-
duction stage is accompanied by adjustments and adaptations to support services to
production; if those services are not given these adaptation steps then major issues can
arise.
1. Implement green stream/red stream or fixed sequence, fixed volume to estab-
lish the entry and exit criteria for products from these streams and establish
the supporting disciplines in the support services. The cycle established will
produce Every Product Every Cycle (EPEC). This is a specific form of Fixed Re-
peating Schedule. Green stream products are those with predictable demand,
Red stream products are high value unpredictable demand products.
2. Faster fixed sequence with fixed volume keep the streams the same but use the
now established familiarity with the streams to maximise learning and improve
speed of production (economies of repetition). This will allow the shortening of

the EPEC cycle so that the plant is now producing every product every 2 weeks
instead of month and then later on repeating every week. This may require sup-
port services to speed up as well.
3. Fixed sequence with unfixed volume keep the stream sequences the same but
now phase in allowing actual sales to influence volumes within those sequences.
This affects inbound componentry as well as support services. This is a more
generalised form of Fixed Repeating Schedule.
4. Unfixed sequence with fixed volume the stream sequences, and EPEC, can now
be gradually flexed but move to small fixed batch sizes to make this more man-
ageable.
5. Unfixed sequence with unfixed volume finally move to true single piece flow and
pull by reducing batch sizes until they reach one.
WT
Demand Leveling
Demand leveling is the deliberate influencing of demand itself or the demand processes
to deliver a more predictable pattern of customer demand. Some of this influencing is
by manipulating the product offering, some by influencing the ordering process and
some by revealing the demand amplification induced variability of ordering patterns.
Demand levelling does not include influencing activities designed to clear existing
stock.
Historically demand leveling evolved as subset of production levelling and has been
approached in a variety of ways:
• The first approach to demand levelling involves careful management of the

sales pipeline. For this method of demand management it is instructive to look
at Toyota in its home market, Japan. Toyota sales teams sell cars door-to-door
whereby they build customer profiles and relationships. The sales process is
low intensity but includes test drives, financing, insurance and trade-in deals.
The sale itself is by special order placed with their representative. This means
that orders can be predicted reasonably accurately in terms of vehicle numbers
some way in advance. Finer specific vehicle details may only become known
with the order. However, the order is often for delivery in the future so these
details can usually be planned before build. Because the customer is getting the
exact car they want there is less negotiation around price as indeed the fact that
the build is to order removes the incentive of the manufacturer, or their agent,
to discount existing stock. The aim of this system is to maximise the revenue
from the customer in the long term. This leads to the sales team handling af-
ter-sales issues of diverse kinds for an extended period to keep customer loyalty
and the relationship which will sell the next car. Between purchases the sales
team remain in touch for all aspects of customer satisfaction with their cars

including feedback for product design on changing customer preferences in the

market. The Japanese market does not have the seasonal, promotional or other
demand surges that are a characteristic of Western automotive markets. It is
debated, for both markets, whether this is caused by manufacturers’ behaviour
or whether manufacturers’ behaviour is a logical response to it.
• A second approach to demand levelling is by deep understanding of the systems
used to order products by retailers and other sellers from manufacturers. Even
where this supply chain is very simple, customer-retailer-manufacturer, it is
usually the case that orders are based on some form of economic order quantity
(EOQ) calculation that aggregates actual customer demand over a certain pe-
riod. This aggregation, and the other clever calculations that may be involved,
often obscure the fact that actual demand for a product is close to flat, and for
high volume products very close to flat. The demand pulsing effect is created by
WT
the ordering process and the more complex it is the greater this effect. The use
of EPOS actual sales data can reveal this effect very clearly.
• A third approach to demand management is to keep finished goods or nearly
finished goods in stock to act as a buffer and thus isolate the production facility
from actual demand. This approach is widely used today but its weakness is be-
coming more and more evident as a growing variety of products is demanded.
The cost of making, storing, managing and protecting finished goods stock can
grow to be prohibitive depending upon product range and demand variability
levels. This usually means that actually whilst stocks are kept they are insuffi-
cient to meet the stated aims and so customer dissatisfaction ensues along with
distressed sales (reduced price) to eliminate stock levels seen as too high.
Implementation
If it is accepted that a large part of demand variability in high volume products can be
substantially caused by sales and ordering process artifacts then analysis and leveling
can be attempted.
The use of long delay supply chains to reduce manufacturing costs often means that
production orders are placed long before customer demand can be realistically esti-
mated. The much later arrival of forecast product demand volumes makes demand
leveling irrelevant since the issue has now switched to disposal at best price possible
products that are already created and possibly paid for. Demand leveling has only
proven possible where build times have been made relatively low and production has
been made relatively reliable and flexible. Examples of these are fast airborne supply
chains (e.g. Apple iPod) or direct to customer selling through web sites allowing late
customisation (e.g. NIKEiD custom shoes) or local manufacture (e.g. Timbuk2 cus-
tom courier bags).
Where actual build-delivery times can be brought within the same scale as customer

time horizons then effort to modify impulse buying and make it somewhat planned
can be successful. Reliable, flexible manufacturing will then mean that low stock levels
(if any) do not interfere with customer satisfaction and that incentives to sell what has
been produced eliminated.
Where demand follows a predictable pattern, e.g. flat, then regular deliveries of con-
stant amounts can be agreed with variances in actual demand ignored unless it exceeds
some agreed trigger level. Where this cannot be agreed then it can be simulated and the
benefits gained through frequent deliveries and a market location.
The predictable pattern does not have to be flat and may, for example, be an annual
pattern with higher volumes at particular periods. Here again the deliveries can be
agreed to follow a simplified but similar pattern, perhaps one delivery volume for six
months of the year and another for the other six months.
WT
Cellular Manufacturing
Cellular manufacturing is a process of manufacturing which is a subsection of just-
in-time manufacturing and lean manufacturing encompassing group technology. The
goal of cellular manufacturing is to move as quickly as possible, make a wide variety
of similar products, while making as little waste as possible. Cellular manufacturing
involves the use of multiple “cells” in an assembly line fashion. Each of these cells
is composed of one or multiple different machines which accomplish a certain task.
The product moves from one cell to the next, each station completing part of the
manufacturing process. Often the cells are arranged in a “U-shape” design because
this allows for the overseer to move less and have the ability to more readily watch
over the entire process. One of the biggest advantages of cellular manufacturing is
the amount of flexibility that it has. Since most of the machines are automatic, simple
changes can be made very rapidly. This allows for a variety of scaling for a product,
minor changes to the overall design, and in extreme cases, entirely changing the over-
all design. These changes, although tedious, can be accomplished extremely quickly
and precisely.
A cell is created by consolidating the processes required to create a specific output,

such as a part or a set of instructions. These cells allow for the reduction of extraneous
steps in the process of creating the specific output, and facilitate quick identification
of problems and encourage communication of employees within the cell in order to
resolve issues that arise quickly. Once implemented, cellular manufacturing has been
said to reliably create massive gains in productivity and quality while simultaneously
reducing the amount of inventory, space and lead time required to create a product.
It is for this reason that the one-piece-flow cell has been called “the ultimate in lean
production.”

History
Cellular manufacturing is derivative of principles of group technology, which were pro-
posed by Flanders in 1925 and adopted in Russia by Mitrofanov in 1933 (whose book
was translated into English in 1959). Burbidge actively promoted group technology in
the 1970s. “Apparently, Japanese firms began implementing cellular manufacturing
sometime in the 1970s,” and in the 1980s cells migrated to the United States as an ele-
ment of just-in-time (JIT) production.
One of the first English-language books to discuss cellular manufacturing, that of Hall
in 1983, referred to a cell as a “U-line,” for the common, or ideal, U-shaped configu-
ration of a cell—ideal because that shape puts all cell processes and operatives into a
cluster, affording high visibility and contact. By 1990 cells had come to be treated as
foundation practices in JIT manufacturing, so much so that Harmon and Peterson, in
WT
their book, Reinventing the Factory, included a section entitled, “Cell: Fundamental
Factory of the Future”. Cellular manufacturing was carried forward in the 1990s, when
just-in-time was renamed lean manufacturing. Finally, when JIT/lean became widely
attractive in the service sector, cellular concepts found their way into that realm; for
example, Hyer and Wemmerlöv’s final chapter is devoted to office cells.
Cell Design
Cells are created in a workplace to facilitate flow. This is accomplished by bringing to-
gether operations (or machines, or people) involved in a processing sequence of a prod-
ucts natural flow and grouping them close to one another, distinct from other groups.
This grouping is called a cell. These cells are used to improve many factors in a man-
ufacturing setting by allowing one-piece flow to occur. An example of one-piece flow
would be in the production of a metallic case part that arrives at the factory from the
vendor in separate pieces, requiring assembly. First, the pieces would be moved from
storage to the cell, where they would be welded together, then polished, then coated,
and finally packaged. All of these steps would be completed in a single cell, so as to
minimize various factors (called non-value-added processes/steps) such as time re-
quired to transport materials between steps. Some common formats of single cells are:
the U-shape (good for communication and quick movement of workers), the straight
line, or the L-shape. The number of workers inside these formations depend on current
demand and can be modulated to increase or decrease production. For example, if a
cell is normally occupied by two workers and demand is doubled, four workers should
be placed in the cell. Similarly, if demand halves, one worker will occupy the cell. Since
cells have a variety of differing equipment, it is therefore a requirement that any em-
ployee is skilled at multiple processes.
While there exist many advantages to forming cells, there are some obvious benefits.
It is quickly evident from observation of cells where inefficiencies lie, such as when an
employee is too busy or relatively inactive. Resolving these inefficiencies can increase

production and productivity by up to and above 100% in many cases. In addition to

this, formation of cells consistently frees up floor space in the manufacturing/assem-
bly environment (by having inventory only where it is absolutely required), improves
safety in the work environment (due to smaller quantities of product/inventory being
handled), improves morale (by imparting feelings of accomplishment and satisfaction
in employees), reduces cost of inventory, and reducing inventory obsolescence.
WT
The Toyota Way shows the design of a U-shaped cell, graphing
the paths of two employees through it.
When formation of a cell would be too difficult, a simple principle is applied in order
to improve efficiencies and flow, that is, to perform processes in a specific location and
gather materials to that point at a rate dictated by an average of customer demand (this
rate is called the takt time). This is referred to as the Pacemaker Process.
Despite the advantages of designing for one-piece-flow, the formation of a cell must be
carefully considered before implementation. Use of costly and complex equipment that
tends to break down can cause massive delays in the production and will ruin output
until they can be brought back online.
“A cell is a small organizational unit...designed to exploit similarities in how you pro-

cess information, make products, and serve customers. Manufacturing cells [closely
locate] people and equipment required for processing families of like products. [Prior
to cellularization, parts] may have traveled miles to visit all the equipment and labor
needed for their fabrication... After reorganization, families of similar parts are pro-
duced together within the physical confines of cells that house most or all of the re-
quired resources,...facilitating the rapid flow and efficient processing of material and
information... Furthermore, cell operators can be cross-trained in several machines,
engage in job rotation, and assume responsibilities for tasks [that] previously belonged
to supervisors and support staff [including] activities such as planning and scheduling,
quality control, trouble-shooting, parts ordering, interfacing with customers and sup-
pliers, and record-keeping.”
The short travel distances within cells serve to quicken the flows. Moreover, the com-

pactness of a cell minimizes space that might allow build-ups of inventory between cell
stations. To formalize that advantage, cells often have designed-in rules or physical de-
vices that limit the amount of inventory between stations. Such a rule is known, in JIT/
lean parlance, as kanban (from the Japanese), which establishes a maximum number
of units allowable between a providing and a using work station. (Discussion and illus-
trations of cells in combinations with kanban are found in) The simplest form, kanban
squares, are marked areas on floors or tables between work stations. The rule, applied
to the producing station: “If all squares are full, stop. If not, fill them up.”
An office cell applies the same ideas: clusters of broadly trained cell-team members that,
in concert, quickly handle all of the processing for a family of services or customers.
A virtual cell is a variation in which all cell resources are not brought together in a phys-
ical space. In a virtual cell, as in the standard model, team members and their equip-
WT
ment are dedicated to a family of products or services. Although people and equipment
are physically dispersed, as in a job shop, their narrow product focus aims for and
achieves quick throughput, with all its advantages, just as if the equipment were moved
into a cellular cluster. Lacking the visibility of physical cells, virtual cells may employ
the discipline of kanban rules in order to tightly link the flows from process to process.
A simple but rather complete description of cell implementation comes from a 1985
booklet of 96 pages by Kone Corp. in Finland, producer of elevators, escalators, and the
like. Excerpts follow:
“The first step involved creating cells in the assembly, electrical and chemical testing
departments. In April 1984 six cells, identified by different colors, were established...
All devices manufactured in cells are identified by the cell’s color, and all feed-back
from quality control is directed straight to the workers of the cell concerned... The sec-
ond step, in summer, 1984, was to “cellularize” manufacture of the analyzer subassem-
blies [that are] needed in the analyzer cells, and to test them if necessary. Production of
the five sub-assembly cells consists exclusively of certain analyzer sub-units. The parts
and materials are located in the cells... Material control between the cells is based on
the pull system and actual demand. In the analyzer cells there is a buffer consisting of
two pieces for each (roughly 25 different) sub-unit. When one piece is taken into as-
sembly, a new one is ordered from the corresponding unit-cell. The order is made [us-
ing] a magnetic [kanban] button, which identifies the ordering cell (by color), unit (by
code), and order date... When the manufacturing cell has completed the order, the unit
is taken with the [kanban] button to its place on the ordering cell shelf. Orders from the
unit cells to the sub-cells are based on the same principle. The only difference is that
the buffer size is six sub-units. This [procedure] was implemented in August, 1984.”
Implementation Process
In order to implement cellular manufacturing, a number of steps must be performed.

First, the parts to be made must be grouped by similarity (in design or manufacturing
requirements) into families. Then a systematic analysis of each family must be per-
formed; typically in the form of production flow analysis (PFA) for manufacturing fam-
ilies, or in the examination of design/product data for design families. This analysis can
be time consuming and costly, but is important because a cell needs to be created for
each family of parts.
There are also a number of mathematical models and algorithms to aid in planning a
cellular manufacturing center, which take into account a variety of important variables
such as, “multiple plant locations, multi-market allocations with production planning
and various part mix.” Once these variables are determined with a given level of un-
certainty, optimizations can be performed to minimize factors such as, “total cost of
holding, inter-cell material handling, external transportation, fixed cost for producing
each part in each plant, machine and labor salaries.”
WT
Difficulties in Creating Flow
The key to creating flow is continuous improvement to production processes. Upon im-
plementation of cellular manufacturing, management commonly “encounters strong
resistance from production workers”. It will be beneficial to allow the change to cellular
manufacturing to happen gradually.
It is also difficult to fight the desire to have some inventory on hand. It is tempting,
since it would be easier to recover from an employee suddenly having to take sick leave.
Unfortunately, in cellular manufacturing, it is important to remember the main ten-
ants: “You sink or swim together as a unit” and that “Inventory hides problems and in-
efficiencies.” If the problems are not identified and subsequently resolved, the process
will not improve.
Another common set of problems stems from the need to transfer materials between
operations. These problems include, “exceptional elements, number of voids, machine
distances, bottleneck machines and parts, machine location and relocation, part rout-
ing, cell load variation, inter and intracellular material transferring, cell reconfiguring,
dynamic part demands, and operation and completion times.” These difficulties need
to be considered and addressed to create efficient flow in cellular manufacturing.
Benefits and Costs

Cellular manufacturing brings scattered processes together to form short, focused
paths in concentrated physical space. So constructed, by logic a cell reduces flow time,
flow distance, floor space, inventory, handling, scheduling transactions, and scrap and
rework (the latter because of quick discovery of nonconformities). Moreover, cells lead
to simplified, higher validity costing, since the costs of producing items are contained
within the cell rather scattered in distance and the passage of reporting time.

Cellular manufacturing facilitates both production and quality control. Cells that are
underperforming in either volume or quality can be easily isolated and targeted for
improvement. The segmentation of the production process allows problems to be easily
located and it is more clear which parts are affected by the problem.
There are also a number of benefits for employees working in cellular manufacturing.
The small cell structure improves group cohesiveness and scales the manufacturing
process down to a more manageable level for the workers. Workers can more easily
see problems or possible improvements within their own cells and tend to be more
self-motivated to propose changes. Additionally, these improvements that are insti-
gated by the workers themselves cause less and less need for management, so over
time overhead costs can be reduced. Furthermore, the workers often are able to rotate
between tasks within their cell, which offers variety in their work. This can further in-
crease efficiency because work monotony has been linked to absenteeism and reduced
WT
production quality.
Case studies in just-in-time and lean manufacturing are replete with impressive quanti-
tative measures along those lines. For example, BAE Systems, Platform Solutions (Fort
Wayne, Ind.), producing aircraft engine monitors and controls, implemented cells for
80 percent of production, reducing customer lead time 90 percent, work-in-process
inventory 70 percent, space for one product family from 6,000 square feet to 1,200
square feet, while increasing product reliability 300 percent, multi-skilling the union-
shop work force, and being designated an Industry Week Best Plant for the year 2000.
By five years later, rework and scrap had been cut 50 percent, new product introduction
cycles 60 percent, and transactions 90 percent, while also increasing inventory turns
three-fold and service turn times 30 percent, and being awarded a Shingo Prize for the
year 2005.
It appears to be difficult to isolate how much of those benefits accrue from cellular
organization itself; among many case studies researched for this article few include
attempts at isolating the benefits. One exception is the contention, at Steward, Inc.
(Chattanooga, Tenn.), producing nickel zinc ferrite parts for electromagnetic interfer-
ence suppression. According to case study authors, cells resulted in reductions of cycle
time from 14 to 2 days, work-in-process inventories by 80 percent, finished inventories
by 60 percent, lateness by 96 percent, and space by 56 percent.
Another cellular case study includes quantitative estimates of the extent to which cells
contributed to overall benefits. At Hughes Ground Systems Group (Fullerton, Calif.),
producing circuit cards for defense equipment, the first cell, which began as a pilot
project with 15 volunteers, was launched in 1987. One month later a second cell began,
and by 1992 all production employees, numbering about 150, had been integrated into
seven cells. Prior to cells, circuit card cycle time, from kit release to shipment to the cus-
tomer, had been 38 weeks. After the cells had taken over the full production sequence
(mechanical assembly, wave solder, thermal cycle, and conformal coat), cycle time had

fallen to 30.5 weeks, of which production manager John Reiss attributed 20 weeks to
use of a “WIP chart system” by the cell teams and the other 10.5 weeks to the cellular
organization itself. Later, when it seemed that the cells were overly large and cumber-
some, cell sizes were shrunk by two-thirds, resulting in “micro cells” that cut cycle time
by another 1.5 weeks. Finally, by adopting certain other improvements, cycle times had
decreased to four weeks. Other improvements included reducing work-in-process in-
ventory from 6 or 7 days to one day and percent defective from 0.04 to 0.01 Switching
from a functional (job-shop) layout to cells often costs has a minus net cost, inasmuch
as the cell reduces costs of transport, work-in-process and finished inventory, trans-
actions, and rework. When large, heavy, expensive pieces of equipment (sometimes
called “monuments” in lean lingo) must be moved, however, the initial costs can be
high to the point where cells are not feasible.
There are a number of possible limitations to implementing cellular manufacturing.
WT
Some argue that cellular manufacturing can lead to a decrease in production flexibility.
Cells are typically designed to maintain a specific flow volume of parts being produced.
Should the demand or necessary quantity decrease, the cells may have to be realigned
to match the new requirements, which is a costly operation, and one not typically re-
quired in other manufacturing setups.
References
• Ruffa, Stephen A. (2008), Going Lean: How the Best Companies Apply Lean Manufacturing Prin-
ciples to Shatter Uncertainty, Drive Innovation, and Maximize Profits, AMACOM ISBN 0-8144-
1057-X
• [Going Lean as a Solution to Navigating Uncertainty and Crisis, Ivey Business Journal, March,
2009]”Archived copy”. Archived from the original on 2009-12-21. Retrieved 2009-04-19
• Aalaei, Amin; Davoudpour, Hamid. “A robust optimization model for cellular manufactur-
ing system into supply chain management”. International Journal of Production Economics.
doi:10.1016/j.ijpe.2016.01.014
• Anderson, Boulanger, Johnson, Kressner (2008), Computer-Aided Lean Management for the
Energy Industry, ISBN 978-1-59370-157-4
• Delgoshaei, Aidin; Ariffin, Mohd Khairol Anuar Mohd; Leman, Zulkiflle; Baharudin, B. T. Hang
Tuah Bin; Gomes, Chandima (2016-01-12). “Review of evolution of cellular manufacturing sys-
tem’s approaches: Material transferring models”. International Journal of Precision Engineering
and Manufacturing. 17 (1): 131–149. ISSN 2234-7593. doi:10.1007/s12541-016-0017-9
• Ruffa, Stephen A., and Perozziello, Michael (2000), Breaking the Cost Barrier: A Proven Ap-
proach to Managing and Implementing Lean Manufacturing, Wiley, ISBN 0-471-38136-5

Permissions
All chapters in this book are published with permission under the Creative Commons Attribution
Share Alike License or equivalent. Every chapter published in this book has been scrutinized by
our experts. Their significance has been extensively debated. The topics covered herein carry
significant information for a comprehensive understanding. They may even be implemented as
practical applications or may be referred to as a beginning point for further studies.
We would like to thank the editorial team for lending their expertise to make the book truly
unique. They have played a crucial role in the development of this book. Without their invaluable
contributions this book wouldn’t have been possible. They have made vital efforts to compile up
to date information on the varied aspects of this subject to make this book a valuable addition
to the collection of many professionals and students.
WT
This book was conceptualized with the vision of imparting up-to-date and integrated information
in this field. To ensure the same, a matchless editorial board was set up. Every individual on the
board went through rigorous rounds of assessment to prove their worth. After which they invested
a large part of their time researching and compiling the most relevant data for our readers.
The editorial board has been involved in producing this book since its inception. They have spent
rigorous hours researching and exploring the diverse topics which have resulted in the successful
publishing of this book. They have passed on their knowledge of decades through this book. To
expedite this challenging task, the publisher supported the team at every step. A small team of
assistant editors was also appointed to further simplify the editing procedure and attain best
results for the readers.
Apart from the editorial board, the designing team has also invested a significant amount of
their time in understanding the subject and creating the most relevant covers. They scrutinized
every image to scout for the most suitable representation of the subject and create an appropriate
cover for the book.
The publishing team has been an ardent support to the editorial, designing and production team.
Their endless efforts to recruit the best for this project, has resulted in the accomplishment
of this book. They are a veteran in the field of academics and their pool of knowledge is as
vast as their experience in printing. Their expertise and guidance has proved useful at every
step. Their uncompromising quality standards have made this book an exceptional effort. Their
encouragement from time to time has been an inspiration for everyone.
The publisher and the editorial board hope that this book will prove to be a valuable piece of
knowledge for students, practitioners and scholars across the globe.

Index
A I
Accounting Processes, 13-14, 17, 23 Implementation Dilemma, 45
Actionable Metrics, 6 Implementation Roles, 116
Administrative Process Wastes, 49 Innovation Accounting, 7
Amplify Learning, 83 Integrated Project Delivery, 71-72
Auditing, 146, 161-162, 178 Internet Companies, 12
Autonomation, 30-31, 36, 90-92, 216 Inventory Valuation, 21, 23
B J
Box Score Reporting, 20 Just-in-time Manufacturing, 32, 36, 107
Box Scores, 20-21
WT
Build-measure-learn, 7 L
Business Model Canvas, 7-8, 28 Labor Information Tracked, 102
Last Planner System, 70-71, 75-76
C Lean Concepts, 8
Capability Maturity Model Integration Lean Construction, 68-72, 76-79, 93
(CMMI), 63, 146, 176 Lean Consumption, 61
Commercial Support, 61 Lean Enterprise, 1, 10-13, 46, 51, 55, 73, 212
Continuous Deployment, 5-6, 11, 28 Lean Government, 48-51, 62
Continuous Improvement, 12, 14, 25-26, 30, 39, 48- Lean Higher Education, 25, 27
49, 51-52, 64, 77, 88-89, 92, 126, 132, 143, 148, 161, Lean Laboratory, 79, 81
213, 218-219, 229 Lean Leadership, 39
Creative Environments, 54 Lean Manufacturing, 1, 4-5, 9-10, 13, 23, 29-30,
Customer Value, 13-14, 24, 29, 54-55, 211 32-33, 39, 42, 44, 46, 48, 51, 53-54, 57, 59-60, 64,
70, 79, 82-83, 90-92, 94-95, 105-107, 113, 136, 143,
D 180, 210-211, 213, 221, 225-226, 230-231
Data Mining, 127-128, 136
Lean Practices, 26-27, 43, 72
Demand System, 57
Lean Product Development (LPD), 82
Lean Service, 52-54
E
Evidence Based Decision Making, 141 Lean Software Development (LSD), 82
Lean Startup, 3-5, 7-9, 12, 28
External Reporting, 14, 22-23
Lean Strategy, 43
F Loading, 81, 94-95, 97, 99
Failure Demand, 53
Financial Reports, 13, 16, 19, 22 M
Machine Operator Efficiency, 94
Fixed Repeating Schedule, 39, 46, 48, 222-223
Minimum Viable Product, 5
Fragmented It Departments, 61
G
Global Supply Chain, 43
Green Stream, 47, 222

234 Index
O Software Engineering Applications, 135

Online Transactions, 60 Split Testing, 6
Overall Equipment Effectiveness, 44, 94-96, 100, Statistical Tools, 121, 124, 132
103 Systematic Documentation, 123
Overall Labor Effectiveness, 99, 102
T
P Target Costing, 21, 24
Pivot, 7, 124 Top-level Metrics, 95
Plain Language Financial, 19 Total Effective Equipment Performance, 95-96
Predictive Analytics Application, 135 Total Productive Maintenance, 3, 30, 103, 105, 111
Process Approach, 141, 143, 156, 161, 163 Toyota Develops Tps, 35
Process Attributes, 167-168 Traditional Accounting, 13, 15-16, 23, 46
Process Costs, 20 Traditional Lean, 65-66, 80, 83
Transaction Elimination, 24
Q
WT
Quality Management, 103, 105, 112, 116, 138-143,
145-148, 152-153, 156-161, 163-164, 173, 176-178, U
182, 208-209 Universal Service Management Body Of
Quality Management Software, 147, 178 Knowledge (USMBOK), 64
R V
Red Stream, 47, 222 Value Demand, 53
Regulatory Requirements, 23, 153 Value Stream Cost Information, 20
Resistance To Change, 61, 117 Value Stream Costing, 22
Root Cause Analysis, 125, 127-128, 130 Value Streams, 13, 15-16, 22, 56-60, 62, 214, 222
Value-based Pricing, 24
S Value-stream Mapping, 57, 62
Semiconductor Industry, 65 Visual Functions, 89
Service Costing, 21-22 Visual Information Sharing, 88
Service Wastes, 52 Visual Workplace, 88-90
Sigma Levels, 118-119, 123, 135 Volatile Incoming Workload, 81
Sigmaxl, 28, 124-125
Simple Manufacturing
System, 44
Software Development, 9, 41, 52, 57, 63, 82-88,
113, 135, 146, 162, 166-167, 172, 177-178, 183, 220

Handbook Of: Lean Six Sigma

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Handbook Of: Lean Six Sigma

Uploaded by

Copyright:

Available Formats

Handbook of

Lean Six Sigma

© 2019 Library Press

Handbook of lean six sigma / edited by Reginald Matthews.

Chapter 1 An Introduction to Lean Six Sigma 1

Chapter 2 A Comprehensive Study of Lean Manufacturing 29

Chapter 3 Fundamental Concepts of Lean Six Sigma 94

Chapter 4 Understanding Six Sigma 112

Chapter 5 Quality Management Tools and Techniques 138

____________________ WORLD TECHNOLOGIES ____________________

• Design of Experiments 193

Chapter 6 Diverse Aspects of Lean Six Sigma 210

Chapter 1- Lean six sigma is a managerial concept that combines methodologies of

Chapter 2- Lean manufacturing is a managerial process that emphasizes on the

____________________ WORLD TECHNOLOGIES ____________________

Chapter 5- Quality management ensures consistency in an organization. It has four

____________________ WORLD TECHNOLOGIES ____________________

____________________ WORLD TECHNOLOGIES ____________________

Lean Six Sigma organization structure

____________________ WORLD TECHNOLOGIES ____________________

2. Seiton - The proper arrangement

3. Seiso - Clean (keep polished)

4. Seiketsu - Purity (maintain clean)

5. Shitsuke - Commitment instilling attitude/atmosphere to maintain 5S

____________________ WORLD TECHNOLOGIES ____________________

____________________ WORLD TECHNOLOGIES ____________________

____________________ WORLD TECHNOLOGIES ____________________

Continuous Deployment (Only for Software Development)

____________________ WORLD TECHNOLOGIES ____________________

Definitions Popularized after the Lean Startup

____________________ WORLD TECHNOLOGIES ____________________

____________________ WORLD TECHNOLOGIES ____________________

• Lean brand management

• Lean product management

____________________ WORLD TECHNOLOGIES ____________________

Principles and Variants

• Pull: Do not make anything until the customer orders it.

• Perfection: Systematically and continuously remove root causes of poor quality

____________________ WORLD TECHNOLOGIES ____________________

____________________ WORLD TECHNOLOGIES ____________________

1980s & 1990s: Motorola

Another development was management techniques from Motorola commonly referred

1990s & 2000s: Internet Companies

____________________ WORLD TECHNOLOGIES ____________________

The second (and more important) thrust of Lean Accounting is to fundamentally

• lean-focused performance measurements

• simple summary direct costing of the value streams

• decision-making and reporting using a box score

• radical simplification and elimination of transactional control systems by elim-

____________________ WORLD TECHNOLOGIES ____________________

• eliminating traditional budgeting through monthly sales, operations, and fi-

• correct understanding of the financial impact of lean change

The Vision for Lean Accounting

Need for Lean Accounting

____________________ WORLD TECHNOLOGIES ____________________

Why is Traditional Accounting not Needed?

____________________ WORLD TECHNOLOGIES ____________________

____________________ WORLD TECHNOLOGIES ____________________

Where does Lean Accounting Apply?

Application to Accounting Processes

____________________ WORLD TECHNOLOGIES ____________________

Lean Performance Measurements

Plan Do Check Act Typical Fre-

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES

WORLD TECHNOLOGIES