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Session : Lean

Innovation Management
V. Vinayagamurthy SIEMENS IT Solutions and Services Private Limited Bangalore -560100

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Lean – Doing More with less
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Lean –Definition Principles of Lean Value Stream Mapping Exercise on VSM

Nov 2010

Innovation Management

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. practices. . and techniques for operational excellence based on empowering the front-line and driving relentless pursuit of perfect customer value creation “This is the manufacturing system developed by Toyota which pursues optimum streamlining throughout the entire system through the thorough elimination of waste and aims to build quality in at the manufacturing process while recognizing the principle of [ongoing] cost reduction. “The Machine that Changed the World” MIT researchers coined the term “Lean” in this 1990 book to describe the principles of the Toyota Production System   An integrated system of principles. • Just process redesign • Limited to repetitive assembly • A one-time improvement program • A menu of tools and techniques . It also includes all the accompanying technology [tools] necessary to accomplish those aims” –Taiichi Ohno Lean IS NOT.What is Lean? Lean IS . . .

What is Value?  Value is something found very important by the customer  Something the customer is willing to pay for listen to your customers! (internal/external)  Value is defined by the user or customer   If the goal of Lean is to maximize VALUE and minimize WASTE. we must be able to recognize the difference   Can Value look like Waste? Yes! Can Waste look like Value? Yes! 4 .

HUGE amounts of waste add unnecessary cost and time To maximize value.Eliminate Waste    Every process. task. Value waste must be eliminated Waste Added Work Incidental Work 5 . product or service is a combination of VALUE + WASTE In most processes.

over-time labor mix Labor pools Cross training Instill rigorous 4 performance management Involve frontline 5 colleagues in improvements Balanced. changes over time.. real-time operational metrics Systematic action planning process Driven to front-line ▪ ▪ A workforce that is “waste aware” and skilled in continually reducing/eliminating waste Problem-solving processes.g. differences in complexity) Delivery/supplier reliability Reduce/ 3 eliminate inflexibility Full-time vs. skills..Lean is underpinned with 5 principles Reduce/ 1 eliminate waste ▪ Non-value added activities (i. part-time vs. eight sources of waste) Reduce/ 2 eliminate variability ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ Variability of demand (e. and tools .e.

g. staffing to peak) ▪ Multiple repositories for similar information . highly skilled developers resolving simple defects) ▪ Failure to leverage front-line ideas for improvement Over processing ▪ Similar service levels regardless of customer value ▪ No cross-group sharing of bestpractice automation/ scripts ▪ Excessive metrics reporting Rework ▪ Inadequate testing before production ▪ Unclear customer requirements causes churn clarifying requests or issues Overproduction ▪ Customer requirements not tied to business priorities ▪ Resolving lower priority defects as quickly as high priority ones Waiting ▪ Idle time or process delays caused by wait time between Dev and Test environment ▪ Slow system response times Motion ▪ Excessive switching across multiple tools and build environments ▪ Lack of standard Dev and Test protocols Transportation ▪ Low in-tier resolution or suboptimal dispatch and routing ▪ Knowledge loss during handoffs Inventory ▪ Excessive delay between original programming and testing that uncovers defects ▪ Unused people capacity (e..g.1 Typical sources of waste in IT service delivery Intellect ▪ Mismatched activities with skill sets (e..

.g.g.2 Typical sources of variability Internal Variability of activity Activity composition External Variability of demand Average = 144 tickets/day A B C ▪ Difference in the difficulty of the activities of the various technicians A B C 7 am 7 pm 6 am Average = 72 tickets/day Variability of individual performance Operator processing time ▪ ▪ Variations in the number of service requests entering system over a period of time Variations in business requirements (e. response time to close ticket) A B C . end of month peak volume) A B C ▪ Difference in the time needed by the technicians to carry out the same activity (e..

3 Eliminate inflexibility From To 1 3 5 TT TT Operator 1 Operator 2 TT TT 1 2 3 2 4 6 6 5 4 Managing inflexibility ▪ ▪ ▪ Flexibly adapt resources capacity to activity volume Manage complexity and improve customer service by – Segmenting activities by complexity. sequencing test script runs in one session – Aligning resources against segmented activities to create skill pools Create segmented pathways to better align effort (e. requirements gathering and prioritization should be tailored to customer’s business needs) . for example..g.

4 Instil rigorous performance management 4. as well Rework action plans as Filtering capability to for following up create customize reports byon KPIs that participant are below target Q D Date n track show perfo Progress Service support scripts – rigorous SOPs to perform repetitive activities Coaching cards – include tools Idle time for managers to have productive dialogues with teams on productivity and quality 10 .2 THE DASHBOARD VISUALIZES THE THE TEAM KPIs Performance Efficiency Visual process aids – coordinate activities of teams and individuals Performance efficiency management tools – tools for tracking KPIs.

5 Create a waste aware workforce 6 Sustain Complex issues = Major kaizen 1 Problem definition 5 Implement 2003 ? 4 Plan M M 2 Data analysis M M Continuous improvement 3 Generate solutions Process A B C “simple” issues = Minor Kaizen (possible to solve issue within 5 minutes) .

task switching) Dedicated team executes project work with minimal interruptions 1st & 2nd line managers are coached to spend more time “on the floor” and become more effective people managers Better management tools implemented Balanced metrics allows frontline to better understand their own importance and link this to overall objectives Career path for technical resources is created with multiple level pools Frontline generally positive to operating in Lean environment Create work rhythm ▪ ▪ ▪ ▪ Better visibility of how their work links to overall performance and quality Sense that they become more productive Environment more conducive to continuous improvement and self-managed teams Improved career progression Improve line management Increase result visibility Clearer career path ▪ ▪ .When done right. Lean empowers the frontline and increases their enthusiasm for work Sample activities driving frontline job satisfaction Eliminate frustrations Stabilize environment ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ Elimination of select non-value added activities through improved value streams Frontline is “protected” from interruptions Swing-capacity system put in place to enable better management of peaks Cross-training increases “personal value” Work segmentation allows frontline to focus on one task at a time (vs.

g. we have created tools (e.. overcoming 2 major hurdles: Consulting Banking Store retail Airlines Upstream E&P Chemicals Shipbuilding Aerospace Consumer products High Tech Medical devices High fashion Manufacturing Pulp and paper Food production Railroads IT Infrastructure operations Technology Insurance Hospitality Law Firms Hospital  Work is less repeatable  Work is less directly observable or measurable with a stopwatch Naval operations and maintenance Pharma Services For both differences. unit of work) that enable us to adapt Lean to IT environments Process industries Industrial products Automotive Toyota 13 .Lean is proven and is now being applied to Technology Application Development & Maintenance R&D Embedded Software Lean has progressively been extended from Manufacturing environments to IT.

Behaviors & Capabilities  Does this by optimizing not only the After  Places a strong emphasis on ensuring a continuous improvement mindset among the frontline  Allows to simultaneously improve productivity.valid for IT as well Before Principles of Lean  Eliminates all unnecessary activities that do not add value: waste.Principles of Lean . and rigidity Operating Procedure but also Management Infrastructure and Mindsets. and satisfaction by attacking root causes (through sequenced pilots) to performance improvement and capability-building  Follows a learn-by-doing approach . risk. variability. quality.

Planning Planning how to implement the future state. 15 . Implementation Achieving the future state. Future State Creating a Lean future state vision.Applying the Value-Stream Mapping Preparation What process to study (product family). Current State Understanding the current situation.

reduces the financial risks of owners Support financial reporting requirements Required to avoid a breakdown of the process  Quality Control Quality Assurance Metrics gathering Rework due to defect repair Risk Management.  Note: Really part of NVA! .What is Value?  Customer Value-Added (CVA)   Activities which directly produce products or services that your customer actually pays for in software development Software Product Development : Only the production of specifications. Project Management. and Configuration Management. Requirements Management. code and manuals counts as Customer Value-Added  Business Value-Added (BVA)     Non-Value-Added (NVA)     Required by regulation or law.

Value Stream Evaluate your processes from a value perspective. .

.Process Cycle Efficiency Value-Added-Time Process Cycle Efficiency = Total Lead Time A process is considered LEAN if its process cycle efficiency is more than 25%.

pp.Value Stream Mapping Mine 20 min process 2 weeks store Reduction Mill 2 weeks store 20 min process 2 weeks store Smelter 3 months store 2 hours process 2 weeks store 2 weeks store 1 minute process 4 weeks store 2 weeks store <1 min process 4 weeks store 2 weeks store 1 min process 4 weeks store Bottler 4 days store 1 min process 5 weeks store Retail Warehouse 3 days store Retail Store 2 days store Home 3 days store 5 min process Womack and Jones. Lean Thinking. 43 aoC l Can Maker Cold Roller Hot Roller .

Software Value Stream Mapping Activity Project Vision Project Approval Gather Requirements Sign-off Architecture Design Architecture Review Detailed Design Detailed Design Review Coding Unit Testing System Test Documentation CVA 0 0 0 0 3 wks 0 4 wks 0 5 wks 0 0 8 wks BVA 1 day 1 hour 3 wks 1 hour 0 0 0 0 0 0 wks 0 0 NVA (Waiting)Other NVA 0 4 wks 2 wks 1 wk 3 days 1 day 1 wk 2 days 0 0 0 0 0 0 1 wk 0 8 days 1 wk 2 wks 7 days 0 5 wks 10 wks 4 wks .

Michael L.Process Cycle Efficiencies Domain Machining Fabrication Assembly Continuous manufacturing Typical 1% 10% 15% 30% World-Class 20% 25% 35% 80% 50% Business Processes 10% .Transactional Business Processes 5% -Source: Lean Six Sigma. George Cognitive 25% .

Check Receive & Arrange Documents IN Review Policy Information Verify Claim IN IN Calculate Payment 1 day IN Print & Mail Check 1 day Manual P/T = 2 mins D/T = 0 %C&A = 99% Bob’s Avail. = 25% 1 day InsPro P/T = 5 mins D/T = 0 %C&A = 90% Ann’s Avail. = 25% 1 day 2 mins 5 mins 1 day 3 days 60 mins 1 day 15 mins 3 days 3 days 5 mins L/T=12 days P/T=87 mins %C&A = 76% Insurance Claim Processing 22 .Value Stream – Example Customer Demand: 13 per day Required Lead Time: 2 – 3 days Disputes: 35% Policy Holder Claim Additional Info. = 20% 3 days Manual P/T = 15 mins D/T = 0 %C&A = 100% Ann’s Avail. = 50% FinSys P/T = 5 mins L/T = 1 – 5 days %C&A = 100% Bob’s Avail. = 20% Phone/Fax P/T = 30-90 mins L/T = 1 -5 days %C&A = 85% Eric’s Avail.

What is a “Lean Value Stream”?  Value from the perspective of the customer  Work Standardized Built in quality &  Flow No waiting No rework Information available Managing Improving & Learning Milestones and Checkpoints Learning embedded 23 .

= 50% FinSys P/T = 5 mins L/T = 1 – 5 days %C&A = 100% Bob’s Avail. = 20% 3 days Manual P/T = 15 mins D/T = 0 %C&A = 100% Ann’s Avail. = 25% 1 day 2 mins 5 mins 1 day 3 days 60 mins 1 day 15 mins 3 days 3 days 5 mins L/T=12 days P/T=87 mins %C&A24 76% = .Insurance Claim Processing Customer Demand: 13 per day Required Lead Time: 2 – 3 days Disputes: 35% Receive Verify Claim Additional Info. Policy Holder Send Check Receive & Arrange Documents IN Review Policy Information Verify Claim IN IN Calculate Payment 1 day IN Print & Mail Check 1 day Manual P/T = 2 mins D/T = 0 %C&A = 99% Bob’s Avail. = 25% 1 day InsPro P/T = 5 mins D/T = 0 %C&A = 90% Ann’s Avail. = 20% Phone/Fax P/T = 30-90 mins L/T = 1 -5 days %C&A = 85% Eric’s Avail.

Insurance Claim Processing Customer Demand: 13 per day Required Lead Time: 2 – 3 days Disputes: 35% Include Checklist Receive Combine Steps Verify Claim with Policy #1 Policy Holder Send Additional Info. = 25% 1 day 2 mins 5 mins 1 day 3 days 60 mins 1 day 15 mins 3 days 3 days 5 mins L/T=12 days P/T=8725 mins %C&A = 76% . Combine Steps Check FIFO FIFO Verify Claim IN IN Receive & Arrange Documents IN Review Policy Information Calculate Payment 1 day Manual P/T = 15 mins D/T = 0 %C&A = 100% Ann’s Avail. = 50% 3 days FinSys P/T = 5 mins L/T = 1 – 5 days %C&A = 100% Bob’s Avail. = 20% IN Print & Mail Check 1 day Manual P/T = 2 mins D/T = 0 %C&A = 99% Bob’s Avail. = 25% 1 day InsPro P/T = 5 mins D/T = 0 %C&A = 90% Ann’s Avail. = 20% Use Small FIFO Phone/Fax P/T = 30-90 mins L/T = 1 -5 days %C&A = 85% Eric’s Avail.

Print & Mail Check FinSys P/T = 20 mins L/T = 1 %C&A = 100% Ann’s Avail. = 80% P/T = 30-90 mins L/T = 1 -5 days %C&A = 85% Eric’s Avail. Check Receive & Review FIFO Verify Claim FIFO Phone/Fax Calculate. = 80% P/T = 7 mins D/T = 0 %C&A = 99% Bob’s Avail. = 50% 1 day 7 mins 3 days 60 mins 1 day 1 days 20 mins L/T=6 days P/T=87 mins 26 %C&A = 84% .Insurance Claim Processing Customer Demand: 13 per day Required Lead Time: 2 – 3 days Disputes: 35% Include Checklist with Policy #1 Policy Holder Claim Additional Info.

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5.Project work   Value Stream Mapping exercise Existing and Improved processes 1. Student Enrollment Process Placement Process Course Design Course Execution Customer Satisfaction Other Project work  Design a Survey for Innovation process and do it internally  What else? . 4. 3. 2.

4th Dec 2010 .Project work content       Introduction Objective As is Process Data collection Lean process Conclusion Submission date .