The Lean Toolbox

By John Bicheno and Matthias Holweg

A new Sixth edition is available from January 2023. (Search for The Lean Toolbox Sixth edition). An e book of this (Fifth) edition is available.

This is the 5th edition of a book that has become a standard reference on Lean principles, systems, and tools in the UK, Ireland, Scandinavia, South Africa, and Australia. Like earlier editions, t

• Language: English
• Publisher: PICSIE Books
• Release date: Jul 1, 2020
• ISBN: 9780956830760

Book preview

1 The Lean Journey

This book has a single purpose: to help you make Lean work in your organisation. It provides you with the key principles and tools needed for a lean transformation. It will guide your implementation and act as a reference guide for you to go back to as you advance on your lean journey. The philosophy will always remain, yet as new challenges arise, different tools will be required. In this book we have assembled the main tools, systems and principles we have found to be useful when applying Lean to manufacturing, as well as services, the public sector, IT operations, and the office. We wish you good luck in your journey!

1.1 What is Lean….?

Lean is about moving ever closer to uninterrupted flow in the sequence of operations that deliver perfect quality – in other words – becoming more of a time-based competitor. ‘Flow’ is not only of physical products and services but also the information and designs necessary to run operations. This requires continuous improvement in three dimensions:

▪ Waste reduction

▪ Value enhancement

▪ People involvement

Without all three, Lean will not survive. Through time, as conditions change, the emphasis may shift from one to another and back again. But always there should be elements of each and guided by a clear customer-related purpose. Note that the capabilities of your people need continuous development.

Especially important is that value must be defined in the eyes of the customer, in terms that are meaningful to the customer.

A ‘quick and dirty’ definition of Lean is ‘doing more with less’. This is of course directly in line with the definition of productivity (outputs / inputs). But this should be interpreted more widely as doing good for customers and stakeholders with less resources – materials, energy, pollution – to achieve ultimate sustainability.

The Lean Enterprise Institute states, ‘The core idea is to maximize customer value while minimizing waste. Simply, lean means creating more value for customers with fewer resources.’

In 2014, Quality Progress magazine defined Lean as ‘the permanent struggle to flow value to each customer.’ This concise definition captures several points:

▪ There is no end point; it is a journey.

▪ It is not easy.

▪ Long term consistency is required.

▪ It is about flow – and improving flow means understanding both customers and the system, and reducing impediments to flow.

▪ The individual customer should be the focus. Not ‘mass’ but ‘one at a time’.

Roger Schmenner, emeritus professor at Indiana talks about ‘swift, even flow’, which is also a neat and succinct summary.

Masaaki Imai, pioneer of Kaizen, now thinks the core concepts are Flow, Synchronization, and Levelling, or ‘FSL’.

Gitlow has the useful concept that value is a function of time, place, and form – to make progress at least one has to be improved, if not all three. Time is delivery lead time. Place is to do with customer convenience. Form is to do with design and utility.

The TRIZ concept of value is the ratio of Benefits divided by Cost plus Harm. Benefits may accrue before, during, or after the event. Harm includes all the possible ‘victims’ – environment, energy, and safety as well as any social harm that may be caused.

1.2 Lean Evolution

For many, Lean started with ‘tools’. Often, these were not even a set of tools but completely independent: 5S here, SMED there, kanban here and A3 there. But, like any set of tools, they are

there for a purpose, not an end in themselves. Like Michelangelo chipping away all marble that was not David, so Lean tools are there to chip away everything that does not enhance value for the customer. For a while, a pure tools approach is not a bad thing. Like Michelangelo’s original marble block, a lot can be removed with little skill. Then came Lean through Principles – often the 5 Lean Principles of Womack and Jones, or principles of self-help, respect, responsibility towards staff, customers and society. This is much better, and better still if systemically brought together.

But now some have begun to realise that ‘real’ Lean is behaviour-driven. What everyone does every day without being told. But how to get to this state of nirvana? Behaviour is built through confidence and security. An example would be pulling the Andon chord when a problem occurs and doing this as a habit, in the confidence that this will be supported and expected. No ‘lip service’. And the habit of using an experimental approach. Over time, with persistence, this builds the ‘world view’ – the things we take to be self-evident.

The most important behaviour is that, at every level, leaders are teachers – continually reinforcing the correct usage of the principles and the tools. Not relying on a 10-day Lean course, or a book, or intranet for their staff to learn the principles and tools – but by self-demonstration and coaching every day.

In some ways the word ‘Lean’ is an unfortunate one, because it has connotations of being manufacturing only (but by no means is confined to it), as well ‘mean-ness’ or ‘cutting back’, generally in terms of headcount. On the contrary, Lean is about growth and opportunity. For example, Toyota has grown not cut back. They have grown because they have capitalized on the huge advantages that Lean brings. It is better to grow into profitability rather than to shrink into profitability.

This leads to another important idea – that of ‘Lean Enterprise’. Womack and Jones have emphasized that Lean is concerned with enterprise not just with manufacturing. If you have already started on your Lean journey without involving design, marketing, accounting, HR, distribution, and field service, you will have to do so very soon or risk the whole programme. These functions have a vital role to play in answering what the organization will do with the improved flexibility, times, and the rest. If the answer is just ‘reduce costs’ management has missed the point. But the Lean enterprise also needs appropriate people policies, measures, accounting, design and new product introduction, supply chain activities, and service initiatives – perhaps ‘servitization’.

David Cochrane makes an excellent point: Lean, says he, is not what organizations need to do. Lean is what organizations should become by effective system design and implementation.

One way of understanding Lean is to view it as a (proven) approach to dispense with increasingly inappropriate ‘economies of scale’ and to adopt ‘economies of time’. To conclude, take Ohno’s Method:

1.Mentally force yourself into tight spots.

2.Think hard; systematically observe reality.

3.Generate ideas; find and implement simple, ingenious, low cost solutions.

4.Derive personal pleasure from accomplishing Kaizen

1.3 The Double Diamond

The ‘Double Diamond’ is a useful concept that has been used for decades in value engineering, design (British Design Council), culture change, and service. A typical example is shown in the figure.

Within each diamond various alternatives are generated, considered, and the appropriate solution selected. Widen out the possibilities, then narrow the focus. Never go blindly after one solution – and then sometimes find it is a bad solution and all the work has been wasted.

Lean has traditionally been seen to apply in the lower diamond. But to confine Lean to Execution is increasingly inappropriate. Much waste, cost and effectiveness is built in during stages in the upper diamond. So the diamond concept is useful as Lean has extended into design (for example by Westrick and Cooper), into ‘3P’, into Lean software (for example ‘Lean Startup’), and into Lean Service (Bicheno).

Each diamond in the broad double diamond contains several diamonds or sub-phases. In the top diamond, for example, there is innovation design, and Production Preparation Process (3P). In the bottom diamond, the same widen-it-out-then-narrow-it-down would be recommended practice in A3, kaizen, value stream mapping, layout, and Six Sigma – to mention just a few.

So in this book increased attention is paid to the top diamond in comparison with the previous edition, and the methodology is recommended throughout.

1.4 Lean, the S-curve and Innovation

Throughout history, every innovation has gone through an S-curve. Slow start, take off, fast growth, slowing growth, and maturity. Lean is no different. Neither is Six Sigma.

In the mid 1960’s the Olympic record for the high jump was progressing slowly. The dominant approach was the ‘Western Roll’. Enter Dick Fosbury with a radically new approach, initially scorned by his coach. But persistence won out and the ‘Fosbury Flop’ triumphed in the 1968 Olympics. From that moment other approaches were instantly outdated. The Western Roll could be improved upon continuously, but will never again win gold.

So it is with Lean: Kaizen and Breakthrough (or Kaikaku) need to work together. Breakthroughs often come from outside. As Steven Johnson has pointed out in Where Good Ideas Come From, they almost invariably involve ‘the adjacent possible’. Innovations are imported from adjacent areas. So Henry Ford used ideas from cattle slaughter disassembly, from ‘scientific methods’ and from the electric motor that enabled high consistency of parts and movement. Toyota built on Ford, but added ideas from the loom, from Juran’s quality ideas and Deming teaching, and from American supermarkets and trams.

Within each big S-curve there are little s curves – smaller innovations that accumulate through time. These are necessary, but not sufficient. Without the occasional breakthrough, Lean will invariably stagnate.

A great danger in Lean, as in other fields, is Groupthink. Lean people always talking to Lean people. Always taking only one company as the role model. As Harvard Business School professor Clayton Christensen has shown, ‘disruptive’ innovations classically come from the outside and are seen as irrelevant until they too improve and cross the line to become ‘good enough’. Perhaps the future of Lean lies with frugal innovations from India, from additive manufacturing, and from service concepts.

(Please see also Section 15.3.)

1.5 Where to start? Lean Transformation Frameworks

In 2015, Lean is well established in many organizations. Many have developed their own frameworks.

Lean Transformation is the core topic of this book, yet if you are hoping to find a shortcut for your Lean journey here, we will have to disappoint you. While one tends to look for the ‘3 steps to heaven’, unfortunately all Lean transformations are different, and there is no one ‘golden bullet’ recipe to follow.

Three Frameworks are presented here – Toyota House of Lean, the Shingo Model and the Hierarchical Transformation Framework. These are intended to help with the appropriate use of the tools that follow. These are not the only frameworks, and we will review some other proven ones in section 1.11. In addition, there are thousands of ‘house of Lean’ versions, plus other (often rather) fuzzy frameworks. The frameworks may help with deciding the approach and priorities. But no framework should be merely ‘lifted’. Innovation and adaptation will always be required.

As George Box the famous statistician said, ‘All models are wrong, but some models are useful’.

1.6 Value Stream Mapping (VSM)

It is possible to use VSM as guiding framework for Lean Transformation. The basic idea is to go to 'gemba' (the workplace) and define the current state or 'as is' map. In a second step, the future state or 'should be' process is defined. The gap between these two maps becomes the implementation plan: what actions need to be taken to get from the current state towards the future state.

After improvements have been made, and the process is stable, new current and future state maps are generated, and the cycle begins again. One will never reach the initially defined future state, but progressively move to an emerging vision of a lean process (See Chapter 9 for details on mapping).

1.7 The House of Lean

First, let us look at the conventional ‘House of Lean’. The original was developed at Toyota. An early version is shown below. Note the two pillars: JIT and Jidoka (Flow and Quality or ‘Go’ and ‘Stop’. Note that having both pillars is a necessary regulating mechanism – you need both. Ohno noted that in the West, the preference was for Just in Time and he was dismayed that Jidoka and ‘automomation’ (automation with a human touch) were frequently downplayed.

Later versions replace the two main pillars of Just in Time and Jidoka with Continuous improvement and ‘Respect for people’, built on a foundation of Learning cycles. Even more lately Rother and Liker have suggested that the Toyota system rests on a scientific way of thinking. But there is more. Scientific thinking is certainly needed for incremental improvement or kaizen. But occasionally creative ‘out of the box’ thinking is needed to break through to the next level.

Here is the good news about such houses: They are familiar and easy to understand. They seem to make sense. They may have a proven record at organizations like Toyota.

Here is the not so good news: They suggest you need to build from the foundations up - irrespective of situation. The walls are not started before the foundations are complete – but often implementation is iterative. Several successful implementations have begun with the Policy Deployment roof. Moreover, the house is strongly tools oriented, rather than system oriented. Where does the customer come in? What happens if you are failing your customers due to poor delivery performance? How do you deliver value? Sustainability issues often result because employees misinterpret tools such as 5S – seen as clean up but not extending to the power of visual management. Another example is Andon – seen as just a signal instead of a big change in responsibility for both operator and team leader. Management becomes disenchanted because there is no impact on the bottom line, and little on customer satisfaction – for quite some time.

1.8 The Lean Enterprise House

Toyota and TPS continue to evolve. Toyota, like many others, have recognised the limitations of too much emphasis on tools. They now use a Lean Enterprise house that differs from the ‘tools’ house. The enterprise house is a wider view and emphasizes philosophy and approach. The ‘whats’, not the ‘hows’. The Toyota Production System may be a house of tools, but the Toyota Enterprise system is far more broad.

The foundation is the ongoing challenge of continually adapting to the needs of customers, employees, and environment. There is kaizen or continuous change for the better. There is teamwork and emphasis on working together. And there is Gemba - the approach of hands-on, going to see oneself rather than management by remote control.

The pillars are now continuous improvement and respect for people. These two go back to the origins of Toyota in the 1930s to 1950s with Sakichi and Kachiro Toyoda. Perhaps they go back to a main source of their inspiration, Samuel Smiles’ Self Help. These two support the Toyota Way – that hard to capture set of principles that Jeffrey Liker as attempted to summarise. And finally, the roof – thinking people – the real root of sustained performance.

The concept of enterprise is important. ‘Enterprise’ means that Lean is not limited to ‘manufacturing’ or ‘operations’. A Lean mindset is necessary for all functions – accounting, IT, HR, marketing, sales, purchasing, distribution, and of course design and development. And not just waste, but value.

Appropriately some have begun to say that TPS stands for Thinking People System, rather than Toyota Production System.

Similarly with customers. There are today’s customers and tomorrow’s customers. And today’s customers come in different categories – those that are very valuable, an intermediate set, and a third set that are just not worth having. Possibly your products or services are inappropriately focused. So waste and value may be perceived differently depending on the customer group. A pensioner may be loyal because extra time and attention is taken, but for a businessman extra time could be waste.

Scott Adams, in the stimulating book, Good Products Bad Products, gives dimensions against which a product will be judged by customers as Performance and Cost, Human fit and ergonomics, Craftsmanship, Emotional appeal, Elegance and sophistication, Symbolism and cultural values, and concern for the environment. Adams makes the point that it is well nigh impossible to score highly on most of these factors, and that different customers will have different perceptions. Value, then, is an elusive commodity and one that must be continually adapted and refined.

Kano, speaking about quality, talks about ‘Basics’, ‘Performance Factors’, and ‘Delighters’. (See Quality chapter.) Much the same can be said about value. There are some activities that are basic to value – defect free has become a basic in some industries. There is ‘performance’ value – lead time for example in some businesses, and ‘delighter’ value. Thus in the Kano model, value and quality are dynamic.

Similarly, Terry Hill talks about ‘order qualifiers’ and ‘order winners’. Qualifiers get you into the league, but winners win the match. Both continually escalate.

Further reading

Darrell Mann, Hands-on Systematic Innovation, IFR, 2009

Scott Adams, Good Products, Bad Products, McGraw Hill, 2012.

1.9 Shingo Prize Framework

In 1988 The Jon M Huntsman School of Business at Utah State University introduced The Shingo Prize in recognition of Shigeo Shingo’s life-time accomplishments in the field of Operational Excellence. The Shingo Model is a comprehensive transformational model that recognizes that to be truly successful the tools and techniques must be led by guiding principles and that an organisation must be able to demonstrate that these guiding principles are embedded in their culture through the behaviour of all employees (Shingo-Institute, 2012).

The model asserts that lean transformation occurs not through tools as tools only answer the question of how, but rather through collective behaviour which is realised through understanding the interrelated and interdependent relationships between guiding principles, systems, tools and results so that we can answer the why question (Shingo-Institute, 2014).

The model further implies that principles govern the laws of science and determine the consequences of human relationships which ultimately influence the outcome of business endeavours. The Shingo Model is built on 10 guiding principles which are supported with 20 supporting concepts and categorised into four dimensions: Cultural Enablers, Continuous Improvement, Enterprise Alignment, and Results.

Simply put, principles should drive behaviour and tools that support those systems. The Shingo Institute contend that when taken in their totality, these timeless principles become the basis for building a lasting culture of excellence in the execution of one’s mission statement (Shingo-Institute, 2014, p. 10).

The model has two assessment scales, Behaviour and Results:

Behaviour (Cultural Enablers, Continuous Process Improvement and Enterprise Alignment) assesses the business through lenses that look at Role, Frequency, Duration, Intensity and Scope to determine the degree to which the Leaders’, Managers’ and Associates’ behaviours are in alignment with the principles of operational excellence.

Results (Quality, Cost/Productivity, Delivery, Customer Satisfaction, and Safety/Environment/Morale) view the business through lenses that look at stability, trend/level, alignment and improvement.

The scoring system is based on a 1,000 point scale. The points are then divided between the two categories (800 points for Behaviours and 200 points for Results). The elements of the categories are weighted and then awarded points based on importance to the operational excellence model.

Behaviours are assessed on three levels – leaders, managers, an associate - in terms of their role. Other aspects of behaviour are frequency, duration, intensity, and scope.

Results are assessed in terms of stability, trend, alignment, and improvement.

These categories – behaviours and results – are a valuable thinking framework for Lean transformation even without knowing the detail.

Perhaps the greatest advantage of the Shingo Prize model is that it is a comprehensive and proven assessment method. (Other assessment models will be discussed in a later section.) Arguably this may be the best way into Lean or to make further progress with Lean. As such it helps prevent ‘pet projects’, ‘quick fixes’ and other sub-optimisations.

Finally, the Shingo Prize framework should not be thought of as a checklist or ‘tickbox’, but rather as prompting an integrated set of questions that should be asked.

Note: Thanks to George Donaldson of News International that became the first Shingo (Gold) winner in the UK in 2014, with help for this section.

1.10 The Hierarchical Transformation Framework

All too often Lean implementations have begun by collecting up a team and then immediately drawing up a current state value stream map followed by kaizen bursts based on the ideas of the team. This is almost invariably a bad idea. While simple, it has been found too simplistic in practice to guide you to the right improvements.

It is far better to stand back, understand customers, products and demand, review the ‘system conditions’ such as KPI’s and the costing system that drive behaviour, assess the skills and culture and then take actions that may or may not initially include value stream mapping.

This chapter sets out a general framework for Lean implementation. However, it is not intended to be generally prescriptive. That would be presumptuous! Any framework will need local adaptation. There are overlaps with both the frameworks discussed earlier. A manager may decide to adapt (say) the Shingo framework but rely on sections of the Transformation Framework for the detail. Any framework for Lean must by its nature be iterative, adopting an experimental approach – trying, succeeding, failing, retrying, learning.

The Transformation Framework is intended to be hierarchical and iterative. The hierarchy is presented on three levels. The steps in Level 1 are the broad, general, early steps. The steps in Level 1 are then expanded upon in Level 2, and in some cases the Level 2 steps are further expanded on in Level 3. The corresponding tools discussed in this book are given in Levels 2 and 3. In each level or sub-level the steps should be regarded as a set rather than a strict sequence.

Level 1: Gaining the Big Picture

At Level 1, the key objective is to set the scene for leading any Lean Transformation. This level is concerned with doing the right things. Lower levels are concerned with doing things right. Doing the right thing requires gaining an appreciation of the many aspects that could be involved in both the short term and the long term. Prioritisation will depend on circumstance, but understanding the Principles will apply in all cases. An appropriate Strategy will always be required. Some quick wins may be possible, but sooner of later any Lean transformation needs to bring together people, customers, money as well as operations.

By the end, you should be familiar with the range of topics that are needed for Transformation and have a ‘systems view’ of their interdependencies.

The relevant book sections are Chapters 1 and 2, Sections 4.1, to 4.3; 5.1 to 5.3; 7.1 to 7.2. (You also may want to read up on the history of Lean in Chapter 18.)

Level 2: Driving a sustainable transformation

At Level 2, the key objective is concerned with ‘doing things right’. This Level gets into the detail of the ‘whats’ and ‘hows’ to achieve sustained Transformation. By the end, you should be familiar with substantial detail of many of the tools and systems of Lean.

This stage falls into many subcategories, which do not necessarily have to be addressed in sequence. Iteration is likely.

Level 2.1: Understanding the principles

At first, understand the principles that form the basis of Lean. These are fundamental to all activities, regardless of the firm’s context and stage of the implementation. Chapters 2, 3 and 4 are relevant here.

Level 2.2: Understand the customers and the nature of demand

Here, the main purpose is to provide the relevant tools and systems for analysing and managing demand.

By the end, you should be familiar with both segmenting demand so as to gain maximum advantage from various demand patterns and with influencing demand to that demand variation can be limited to what customers actually require rather than by variation caused by the organisation itself.

Relevant sections are: Chapter 8.1. and 8.2., Chapter 13, and 11.1 and 11.2.

Level 2.3: Strategy, planning, communication

Here, the main purpose is to identify those products and processes that will have the greatest impact on a Lean Transformation, and to develop and deploy strategy and tactics so that everyone is empowered to take actions appropriate to their level or function.

By the end, you should be familiar with the formulation of strategy for Lean and the concepts of how best to deploy strategy and policy.

Relevant books sections are: Chapters 5 and 6 and most importantly, Chapter 7.

Level 2.4: ‘Check’, map and develop the Future State

Here, the main purpose is to develop expertise with the vital mapping tools that are an essential feature for any Transformation.

By the end, you should be familiar with a range of mapping tools and how they may be integrated effectively to transform a current state into a future state.

Most relevant here is Chapter 9.

Level 2.5: Product rationalization and Lean Design

At this stage the main purpose is to achieve effective product design and rationalization so that the right products are introduced effectively.

By the end, you should be familiar with concepts that relate to pre-manufacture. Design methodologies that both reduce development time and ensure quality products are discussed. The essential tradeoffs in product design and rationalization are presented.

See Chapters 13 and 14.

Level 2.6: Implement the Foundation Stones

The Lean foundation stones are applicable in all situations. Whilst they do not have to be fully or even partly implemented at an early stage, a weak foundation leads to a weak and non-sustaining general implementation.

The foundation stones are 5S in Chapter 8.7., Standard Work in Chapter 8.9., and the improvement cycles in Chapter 4.3.

Level 2.7: The Value Stream Implementation Cycle

Value Stream implementation is a central, ongoing activity within a Lean enterprise. The main steps are given in Chapter 9.4., and some steps are detailed further in Level 3.

Level 2.8: Building a Lean Culture

Here, the main purpose is to give guidance for the absolutely essential ‘people’ aspects of Lean Transformation.

By the end, you should be familiar with current concepts relating to the psychology of change for Lean organisation. Together, these concepts can create the culture change and buy-in that are essential if Lean is to be sustained.

Chapter 5, and especially 5.6., are relevant.

Level 2.9: Implement Lean Supply

The quality, cost and delivery (lead-time) of a process is the outcome of a co-production between the manufacturing firm and its suppliers. Lean implementations therefore must consider the entire value stream. Here, the main purpose is to address contemporary Lean Supply Chain issues and give guidance as to their successful implementation.

By the end, you should be familiar with Lean supply chain concepts such as partnership, risk, measures, inventory considerations and the avoidance of polices that lead to demand amplification

See Chapter 15.

Level 2.10: Implement Lean Distribution

Just as important as managing the upstream supply chain, is to manage the downstream (or distribution and retail) end.

See Chapter 15.

Level 2.11: Costing and Performance Measures

‘What you get is what you measure’ – so here the main purpose is to appreciate the vital role that accounting, costing, and measurement plays in any Lean Transformation.

By the end, you should be familiar with the risks of not involving the accounting function, the distortions of costing systems, and better ways to incorporate ‘the financials’ in a Lean Transformation. Appropriate measurement considerations are also proposed.

See Chapter 16, and Chapter 5.1.-5.4.

Level 2.12: Improve and Sustain

Here, the main purpose is to provide frameworks that enable improvement to be both continuous and effective.

By the end, you should be familiar with a considerable range of tools and systems for improvement that apply to any aspiring Lean organization. There are appropriate CI tools for every level tools and every stage from concept to customer.

An overview is given in Chapter 4, where guidance on finding detailed tools can be found.

Level 3: Detailed scheduling, cell and line design

In this section two aspects are expanded upon from Level 2 – Detailed scheduling, and Lean Cell and Line Design.

Level 3.1: Designing the Scheduling System

Detailed scheduling system design is a late but vital step in Lean implementation. Two sections are given here depending on the type of scheduling environment – repetitive with clear value streams and minor changeovers, and more complex situations having shared resources and batching. Of course, many plants will have elements of each.

See Chapters 11 and 12.

Level 3.2: Cell and Line Deign

Cells and assembly lines are found in many Lean manufacturing environments. In this section, guidance is given on how best to approach key points and issues in the design of these elements.

See Chapter 11.7.

1.11 Other Approaches to Lean Implementation.

Almost every ‘Lean Guru’ and consultancy has their own approach to Lean Transformation. There is no Six-Sigma-like DMAIC agreed process. Inevitably, some are better than others, all claim to work, most of them can quote at least one successful implementation, sometimes many. The point is a ‘horses for courses’ message: there is no right or wrong. The approach should be chosen based on need: Order fulfilment? Culture change? Leadership? An audit approach can be a comprehensive foundation. There are also differences between manufacturing and services. Remember also that whilst the Toyota system is undoubtedly effective for short-cycle repetitive manufacturing this does not mean that it will work well in pharmaceutical, or in aerospace or in low volume custom environments. Adaptation is usually required. Always ask where the approach originated and whether that is the situation that you face. The table attempts to summarise some of the better approaches known to the authors.

Notes on table:

1.Womack and Jones are authors not consultants or active implementers. Strongly champion Toyota. The ‘House of Lean’ may be one model that is used. Womack and Jones also proposed the ‘Purpose, People, Process’ trilogy.

2.Liker and Convis have written on Lean Leadership. Koenigsaecker is an author and also a CEO who has ‘done it’. Rother, through ‘Kata’, sees learning cycles as the way forward.

3.This is an attempt to capture the Vanguard methodology. John Seddon is a leading figure and author on Service, with emphasis on systems. Recently ‘Ohno and Deming had it right’ but many don't.

4.Goldratt’s Theory of Constraints (TOC) is morphing into Factory Physics.

5.There are several Audit approaches. Kobayashi’s 20 Keys is probably the original. Often attractive to top managers who like a simple score, but a danger is that tick box develops. Shingo prize has emerged as the big one.

6.Several large consultancies use a fairly standardised Lean roll-out procedure, beginning with top level contact.

2 The Lean Mindset

Over the past four decades, much has been written about JIT, Toyota and Lean. They make a formidable list! But here are the main points for understanding the Lean Management System, grouped under five headings:

▪ Philosophy, including ideals and principles

▪ The wastes and new wastes

▪ The characteristics of Lean

▪ The ‘Toyota DNA’

2.1 The ‘Ideal Way’, ‘True North’, and Purpose

Perfection, as we shall see, is Womack and Jones’ fifth Lean Principle. It could have been the first. So we need to ask, continually, ‘Will that move us closer to the Ideal?’. And what is the ideal? It is perfect quality, zero waste, perfect customer satisfaction. (Is it so ridiculous to talk about ‘Free Perfect and Now’ as Robert Rodin did in transforming his company, Marshall Industries, pointing out that all the trends are going in those directions?) Indeed, think of Skype and Google.

Toyota talks about ‘True North’. Toyota Chairman Watanabe had a dream for the ideal state: A car that can improve air quality rather than pollute, that cannot injure people, that prevents accidents from happening, that can excite and entertain, and drive around the world on one tank of gas.

Ohno had a vision too – of one at a time, completely flexible, no waste flow. In fact, that has been the driving force of Toyota for the past 50 years. Ohno did not have a Lean toolbox. He had in mind a vision of where he wanted to be. The vision first, THEN the necessary approach and tools. So look at every job, every process, and every system. What is the ideal way to do it? What is preventing us from doing that? How can the barriers be removed?

Another word that has become popular in Lean is ‘Purpose’. The purpose of the organization from the customers’ perspective. Of course, this is not ‘profit’ or the bonus of the CEO. Johnson and Johnson express this in their Credo: ‘our first responsibility is the doctors, nurses and patients, to mothers and fathers and all others who use our products and services. In meeting their needs everything we do must be of high quality….’ (it continues about employees, communities and environment).

Moving towards perfection or true north is a repetitive process. Reducing the batch size moves you closer to the ideal, but you will need to come back and reduce it further. After you make the engine more fuel efficient, try it again then again and again.

Likewise, Levitt maintained that Ford was not a production genius, but a marketing genius. His purpose was to make America, not only the rich, more mobile. He realised that if he could make and profitably sell a car for $500, millions of cars could be sold. That being the case, he had to find a way to make such a car.

Mike Rother, with the Kata approach, talks about the ‘target condition’ rather than True North. The target is where we want to be, but the path to get there is seldom clear in the detail. So we need to experiment, to see what works and what doesn’t get us nearer to the target. The word ‘experiment’ comes from ‘ex’ meaning from and ‘periri’ meaning try or attempt. This is the essence of PDSA, kata, kaizen – try it out and see. Whether succeed or fail, you learn.

2.2 The Five Lean Principles

In Lean Thinking, Womack and Jones renewed the message set out in The Machine that Changed the World (that Lean was, at least in automotive, literally Do or Die), but extended it out beyond automotive. These reflective authors have given manufacturing, but to an extent also service, a vision of a world transformed from mass production to Lean enterprise. The five principles set out are of fundamental importance. Reading the Introduction to Lean Thinking should be compulsory for every executive.

Throughout Lean Thinking, Womack and Jones emphasized Lean Enterprise rather than Lean Manufacturing. In other words it was emphasising systems. But unfortunately the book became thought of as a manufacturing book, and the system message was missed.

In this section, whilst using Womack and Jones’ 5 principles, some liberties have been taken, particularly in relating them to service. Some managers are upset by the five principles, believing them not to be feasible within their industry. But this is to miss the point, which is vision: you may not get there within your lifetime, but try - others certainly will.

1.The first point is to specify value from the point of view of the customer. This is an established marketing idea (that customers buy results, not products - a clean shirt, not a washing machine). Too often, however, manufacturers tend to give the customers what is convenient for the manufacturer, or deemed economic for the customer. Womack and Jones cite batch-and-queue airline travel, involving long trips to the airport to enable big batch flights that start where you aren’t and take you where you don’t want to go, via hubs, and numerous delays. Recent work by Ariely and by Kahneman have revealed the myth of the economic rational man. So, what they value is uncertain – hence experimentation as for example in Ries’ The Lean Startup.

2.Then identify the Value Stream. This is the sequence of processes all the way from raw material to final customer, or from product concept to market launch. If possible look at the whole supply chain (or probably more accurately the ‘demand network’). You are only as good as the weakest link; supply chains compete, not companies. Focus on the object (or product or customer), not the department, machine or process step. Think economies of time rather than economies of scale. Map and measure performance of the value stream, not departments.

3.The third principle is Flow. Make value flow. If possible use one-piece or one-document flow. Keep it moving. Avoid batches and queues, or at least continuously reduce them and the obstacles in their way. Try to design according to Stalk and Hout’s Golden Rule - never to delay a value-adding step by a non value adding step. Flow requires much preparation activity. But the important thing is vision: have in mind a guiding strategy that will move you inexorably towards simple, slim and swift customer flow.

4.Then comes Pull. Having set up the framework for flow, only operate as needed. Pull means short-term response to the customer’s rate of demand, and not over producing. Think about pull on two levels: on the macro level most organisations will have to push up to a certain point and respond to final customer pull signals thereafter. An example is the classic Benetton ‘jerseys in grey’ that are stocked at an intermediate point in the supply chain in order to retain flexibility but also to give good customer service at low inventory levels. On the micro level, respond to pull signals as, for instance, when additional staff are needed at a supermarket checkout to avoid excessive queues. Attention to both levels is necessary. Each extension of pull reduces forecast uncertainty. Pull places a cap on inventory in the system.

5.Finally comes Perfection. Having worked through the previous principles, ‘perfection’ now seems more possible. Perfection does not mean only defect free - it means delivering exactly what the customer wants, exactly when (with no delay), at a fair price and with minimum waste. Beware of benchmarking - the real benchmark is zero waste, not what the competitors or best practices are doing. In retrospect, perhaps a better phrase would have been ‘continuous improvement’.

One quickly realises that these five principles are not a sequential, one off procedure, but rather a journey of continuous improvement. Start out today. Again, in retrospect, what is remarkable is that the original five make no reference to people.

2.3 Lean is not tools – or even a set of integrated tools!

Maslow, famous for his hierarchy of motivation said in 1966, ‘It is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail’. Just so with Lean tools.

Maybe you have found yourself in the position of many other Lean enthusiasts: trying very hard to use the Lean tools and getting some good localised results but not making a breakthrough in performance that would emulate what Toyota achieved? Here’s a simple but powerful lesson: if you want to get the same result, follow the same process. Toyota did not start with the tools: they did not start with their system. They started with an unremitting focus on how to use their resources to produce a product that is defined to be as close as possible to what the customer wants to buy now, and how to align the flow of production as close as possible to the flow of cash into the business. As the goal of the business is to make money, that makes sense, doesn’t it?’

In their excellent book Nudge, Thaler and Sunstein recount the story of the discovery of car windscreen pits (or minor damage) at a small American town in the 1950’s. The discovery of windscreen pits in one region led to discoveries in adjoining regions. Investigations were launched. Possible causes, ranging from radioactivity to aliens, were postulated. But the pit phenomena continued to grow. Eventually an in-depth scientific study found that windscreen pits occur in almost all cars as a result of routine use. It was just that drivers were sensitized to notice pits that were always there.

So it may be with Lean implementation. What do you need to do and what is important? First we thought quality circles. Aha! That is the thing to do! Later came changeover, then kanban, then 5S, then kaizen event, then value stream mapping, then people issues, then policy deployment, and now leadership and sustainability.

Like windscreen pits, these issues were always there. So, stand back and try to look at the total system. Pfeffer and Sutton recommend that one should try to benchmark the thinking, rather than the technique. Is the company you admire achieving success because of the technique or approach, or in spite of the technique, they ask.

2.4 Gemba and Genchi-Genbutsu

‘Gemba’ is the place of action – often but not necessarily the workplace. This Japanese word has taken on significance far beyond its literal translation. Taiichi Ohno, legendary Toyota engineer and father of TPS, said, ‘Management begins at the workplace’. This whole philosophy can best be captured by the single word: Gemba.

Contrast the Gemba way with the traditional (Western?) way. The Gemba way is to go to the place of action and collect the FACTS. The traditional way is to remain in the office and to discuss OPINIONS. Gemba can be thought of in terms of the ‘four actuals’: Go to the actual workplace, look at the actual process, observe what is actually happening, and collect the actual data.

Some prefer to use the phrase genchi-genbutsu, or ‘go and see’. Observe first hand. KPIs, measures, reports are no substitute for direct observation.

These important concepts appear throughout this book. In particular ‘Gemba Walks’ are discussed in the Improvement chapter.

2.5 Pull

Pull is a central concept in Lean. The essential idea is that parts are pulled to replace inventory only as needed, and not pushed to the next stage irrespective of need.

Unfortunately, for many, ‘pull’ is synonymous with kanban. This is a very narrow view. The concept is far more powerful. Sometimes there is confusion about pull with an MRP system that orders only what is needed when it is needed.

Let us begin with what we regard as the best definition of a pull system, from Hopp and Spearman:

A pull system is one in which work is released based on the status of the system and thereby places an inherent limit on WIP.

By contrast, ‘A push system is one in which work is released without consideration of system status and hence does not inherently limit WIP.’

Therefore, immediately, we see that an MRP system is a push system. Nor is pull a make to stock or a make to order system.

But pull systems go beyond work in process (WIP).

There are three great and related advantages of pull, apart from limiting WIP. These are:

▪ Speed of response. Many push systems operate through a planning system, so take time to respond. Pull systems are near instantaneous and ‘low tech’.

▪ Problem detection. For example line imbalance and stoppages are immediately apparent.

▪ Visibility of problems.

Thus, a pull system is generally superior to push for quality, cost, and delivery. A pull system:

▪ Is commonly used to pull replacement parts into an assembly line or replacement inventory onto a supermarket shelf. (There are various systems and types of kanban for this. They will be discussed in the Scheduling chapter.)

▪ Reduces the necessity for forecasts, at least for repetitive operations.

▪ Can be used to pull manpower into a workstation as needed (such as assembly line or checkout counter in a supermarket).

▪ Can be used in a design office or in ‘Agile’ software development to limit the number of jobs in progress at any time.

▪ In a supply chain, pull can work between various organisations. This has the important advantage of avoiding the disastrous bullwhip effect. (This effect is discussed in the Supply Chain section.)

▪ Can be used to open up a second shift or another line, only as needed.

▪ May include Andon. The Andon system (or line stop) where an operator can pull the chord if a problem occurs, is a form of pull. Andon is an early warning system: in a moving assembly line progress marks are displayed. An operator will pull the cord if he is well behind the stage where he should be. The team leader responds immediately so the problem is often solved before the end of the work cycle and there is no need to stop the line unless the problem is unresolved. But Andon is more than just a tool to limit faults being passed on; it is a culture change method that asks both operator and team leader to participate in problem reduction.

▪ Similarly, managers or experts can be pulled into office jobs or call centres to cope with non-routine demands. This avoids having to attempt the wasteful task of trying to train staff for all possibilities rather than only for high frequency, predictable value demands that often constitute only a proportion of total demand. The experts meanwhile work on improving the system: a form of buffer.

▪ Priority pull signals or kanban can be used to indicate the most urgent work to be done. If there is a shared resource, pull signals accumulate from more than one stream and the urgency is indicated (typically) by colour the number of accumulated cards for a particular stream. (This is discussed in more detail in the Scheduling chapters 11 and 12 ).

▪ Finally, the ideal Pull is the ‘Tom Sawyer’ effect where Tom’s friends beg him to let them help paint the fence. Tom pretends to resist…..

2.6 Muda and the Seven Wastes

‘Muda’ is Japanese for waste. Waste is strongly linked to Lean. Fujio Cho, former President of Toyota, defined waste as ‘anything other than the minimum amount of equipment, material, parts, space, and worker’s time, which are absolutely essential to add value to the product’. (Toyota publications, by the way, always refer to the elimination of unnecessary wastes.)

But consider:

▪ Waste elimination is a means to achieving the Lean ideal – it is not an end in itself.

▪ Waste prevention is at least as important as waste elimination.

▪ Value is the converse of waste. Any organisation needs continually to improve the ratio of value adding to non-value adding activities. But there are two ways to do this – by preventing and reducing waste, but also by going after value enhancement specifically.

Before getting carried away with waste reduction, pause.

▪ Waste reduction is not the same as cost reduction. As Seddon has pointed out, cost reduction initiatives invariably lead to increases in cost! Why? Because cost related KPI’s lead to unexpected behavioural outcomes and to failure demand. Ask BP about their cost reduction strategy that led to huge punitive expenditure initially at Texas City refinery and later at Deepwater Horizon Well.

▪ Waste reduction without follow through is pointless. If, for example, movement waste has been reduced it needs to be followed through by, perhaps, reducing the number of kanban cards in the loop,

And, before we get to discuss the 7 Wastes, we need to be aware that there is almost always another level of resolution of waste. Within a ‘value adding step’ there are more detailed micro wastes, as in a robot cycle; like the production engineer shaving seconds off a machine cycle, when the end-to-end lead time is weeks. So it is important to home in on the right level of resolution. Go after big picture wastes first.

Taiichi Ohno, father of the Toyota Production System, of JIT, and patriarch of Lean Operations, originally assembled the 7 wastes, but it was Deming who emphasised waste reduction in Japan in the 1950’s. Today, however, it is appropriate to add to Ohno’s famous list, presumptuous though that may be. The section after next begins with Ohno’s original seven, then adds ‘new’ wastes for manufacturing and service.

Before we go further, we should remember that Ohno was critical about categorization. Categorization may blind you to other opportunities. As an example, our late colleague VS Mahesh who was once a senior executive with Tata Hotels, tells of Masaaki Imai visiting the Taj Hotel in Mumbai. Imai told the management that a room with one of the best views in the hotel was used as a laundry. What a waste!

Type 1’ and ‘Type 2’ Muda, Elimination and Prevention

Womack and Jones usefully talk about two types of waste. Type 1 Muda are activities that create no value but are currently necessary to maintain operations. These activities do not do anything for customers, but may well assist the managers or stakeholders other than customers or shareholders. Type 1 should be reduced through simplification. It may well prove to be greatest bottom-line benefit of Lean. Moreover, Type 1 muda is the easiest to add to but difficult to remove, so prevention of type 1 muda should be in the mind of every manager in every function. Type 2 Muda is pure waste. It creates no value, in fact destroys value, for any stakeholder, including customers, shareholders, and employees. Elimination should be a priority. Type 2 tends to grow by ‘stealth’, or carelessness.

Waste Elimination is achieved, by as Dan Jones would say, by ‘wearing muda spectacles’ (a skill that must be developed), and by kaizen (both ‘point’ and ‘flow’ varieties), at the gemba. Elimination is assisted by 5S activities, standard work, mapping, level scheduling and by amplification reduction. Ohno was said to require new managers to spend several hours in a chalk circle, or on a chalk x, standing in one place and observing waste. Stay there until waste and variation has been noticed sufficiently well. Or, if not observed sufficiently well, ‘Look more’ and again ‘look more’, and yet again!

Waste Prevention is another matter. Womack and Jones talk about the ninth waste – making the wrong product perfectly – but it goes beyond that. Waste prevention cannot be done by wearing muda spectacles, but requires strong awareness of system, process, and product design. It is thought that perhaps 80% of costs are fixed at the design stage. Of that 80%, a good proportion will be waste. System design waste prevention involves thinking the movement of information, products and customers through the future system. For instance, questioning the necessity for ERP and the selection of far-removed suppliers and removing layers in a supply chain. Process design waste prevention involves the avoidance of ‘monuments’, the elimination of adjustments, and working with future customers and suppliers to ensure that future processes are as waste-free as possible. For instance, should ‘servitization’ be considered?. Prevention involves much more careful pre-design considerations. It also involves recycling considerations.

In the opinion of the authors, waste prevention is likely to assume a far greater role than waste elimination in the Lean organisation of the future – in the same way that prevention in quality is now widely regarded as more effective than inspection and fault elimination.

Value Added, Non Value Added (Necessary and Avoidable)

In Lean manufacturing the terms ‘value adding’, ‘avoidable non value adding’ and ‘necessary non value adding’ are widespread, meaningful, and useful. Abbreviate these to VA, NVA, and NNVA. Value added activity is something that the customer is prepared to pay for and involves a transformation. In some types of service, for example, health care and holidays, the customer is certainly prepared to pay for experience-enhancing activities so VA, NVA and NNVA designations need to be treated with care.

For other types of manufacturing and administration, for example many clerical procedures, one may argue that the customer is never happy to pay. To call activities NNVA can be both unhelpful (since everything is NNVA) or demotivating to employees – How would you like to spend most of your life doing necessary non value added work?

One major maintenance organization simply says that waste is anything other than the minimum activities and materials necessary to get the job done immediately, right first time to the satisfaction of customers. They don’t get into Type 1 and Type 2, nor into NVA and NNVA semantics. Another definition of waste is anything that does not affect Form, Fit or Functionality.

A measure of the proportion of VA time is Process Cycle Efficiency (PCE)

PCE = VA time / (process lead time)

Some companies use this to prioritise which value streams to work on. But, take care:

• An apparently high PCE may be very inefficient because of a few long cycle operations.

• Does PCE account for rework, or failure demand? Some PCE analysis