Notes and thoughts from "Lean Thinking : Banish Waste and Create Wealth in Your Corporation, Revised and Updated" by James Womack and Daniel Jones.
The author's stated goal is to concisely summarize the principles of "lean thinking" to provide a dependable guide for action for managers trying to "transcend the day-to-day chaos of mass production." (p. 10)
Lean thinking can be summarized in five principles (p. 10)
- Precisely specifying value by specific product
- Identifying the value stream for each product
- Make value flow without interruptions
- Let the customer pull value from the producer
- Pursue perfection
Muda is the Japanese word for waste (p. 15)
- Specifically any human activity which absorbs resources but creates no value
Lean thinking is the antidote for muda as it provides a way to do more and more with less and less (p. 15)
Lean thinking also provides a way to make work more satisfying by providing immediate feedback on the process of converting muda into value (p. 15)
Lean thinking provides a way to create new work as opposed to cutting jobs in name of efficiency (p. 15)
Value can only be determined by the ultimate customer and must be expressed in terms of a specific product (p. 16)
An interesting evaluation question posed is… (p. 16)
- Can you put yourself in the position of a design as it progresses from concept to launch, an order as information flows from initial request to delivered product, and the physical product as it progresses from raw material to the customer, and describe what will happen to you at each step along the way?
- Many executives and managers cannot and this indicates that the immediate needs of shareholders and the financial mind-set of the managers have taken precedence over the day-to-day realities of specifying and creating value for the customer.
One can look historically at German and Japanese engineering and product development and learn… (p. 17)
- Striving for technical refinements and elegant complexity due to strong technical leadership can be serving only that leadership's sense of worth, and not necessarily providing value to the customer.
- A focus on where value is created, that is a stay-at-home-at-all-costs mentality, can deplete financial resources necessary to do things differently in the future. This can indicate a priority of serving the needs of employees and suppliers over the those of the customer.
Lean thinking must start with a conscious attempt to precisely define value in terms of specific products with specific capabilities offered at specific prices through a dialogue with specific customers. (p. 19)
- It is clear that Womack and Jones see this as being a very granular definition as they use the words "precisely" and "specific" so pervasively.
Providing the wrong good or service the right way is muda. (p. 19)
The value stream is the set of specific actions required to bring a specific product (or service) through the three management tasks of any business. (p. 19)
- Problem solving task - from concept to production
- Information management task - from order taking to delivery
- Physical transformation task - from raw materials to a finished product (or service)
The value stream can help identify obvious value tasks, type one muda, and type two muda. (p. 20)
- Type one muda - necessary waste… no value but apparently still required steps
- Type two muda - pure waste… no value, immediately avoidable steps
Creating a lean enterprise requires rethinking firm-to-firm relationships (p. 21)
To create flow one must break down the mental model of functions and departments (p. 21)
- The common sense approach of batching work brings long wait times and idle periods as the work crosses departmental and functional activities.
Kaikaku is a Japanese word that carries the idea of "radical improvement" (p. 23)
Kaizen is a Japanese word that carries the idea of "continuous incremental improvement" (p. 23)
Flow thinking is counterintuitive. In traditional departmental environments, it's enemies are career aspirations of employees and cost-based accounting. (p. 23)
Functional departments must be redefined so that the employees can contribute to value creation, and it subsequently in their best interest to make value flow. (p. 24)
The first visible effect of converting from departments and batches to product teams and flow is that time to deliver value to the customer falls dramatically. (p. 24)
As the efforts are made to realize the first four principles, it eventually becomes clear that their is no end to the process. This leads to understanding the fifth principle that is the pursuit of perfection. (p. 25)
Most producers want to make what they are already making, and many customers only know how to ask for some variant of what they have already been getting. (p. 26)
- Because of this it is very important to abandon your conventional approach and jointly identify value with your customer.
The appropriate definition of value changes once you look at it the whole through the eyes of the customer and not from the perspective of various firms along the value stream. (p. 34)
It is vital that producers accept the challenge of redefinition (p. 35)
The final element in value definition is is to identify the target cost to deliver the product or service to the customer. This is the cost if all visible muda were removed from the process. (p. 35)
- "What is the muda-free cost of this product?"
Relentless scrutiny of every activity along the value stream, searching for muda at every step, is key to reaching the target cost. (p. 36)
