Reflection Questions 1. Gather statements of your company’s values (Hint: The mis- sion statement is one source). 2. Evaluate the relationship between stated values, beliefs, mission, and what the company actually seems to stand for. Consider the model in Figure 2.1. Evaluate your company’s values and mission in light of this model. a. Is the purpose of your company narrowly stated in one of the four boxes, or across all the boxes—internal, external, people, and business? b. Do you have a clear and consistent social pact with team associates? c. Are team associates partners or variable costs? d. Does the company philosophy change with each CEO or is there continuity of purpose? 3 Take the opportunity in an off-site meeting, or arrange an off-site meeting, to discuss and write down your company’s way. It should build on the strengths and unique history of your company. 4. Begin the process of educating all your leaders on your com- pany’s way. 29 Chapter 2. Define Your Company Purpose and Begin to Live It This page intentionally left blank Part III Creating Lean Processes Throughout Your Enterprise Copyright © 2006 by The McGraw-Hill Companies, Inc. Click here for terms of use. This page intentionally left blank Lean Means Eliminating Waste Getting “lean” has become a corporate buzzword. A corporate executive hearing about the success of his competitors with a lean program might say to a sub- ordinate, “We must get lean to survive in this competitive market. Go take a course and get certified on this lean stuff and come back and do it.” If only it were so easy. The subordinate, often a middle manager or engineer, goes through the certification course, starts to sort out the bewildering array of terms like “kanban,” “andon,” “jidoka,” “heijunka,” “takt time,” and on and on, and comes back charged up and overwhelmed. “Where do I start?” he asks. “Our processes don’t look like the case examples they used in class.” Unfortunately, every process is different, and simply learning a template for setting up a kanban system or building a cell may not transfer in a straightforward way to your operation. Quite possibly a tool used by Toyota, as they use it, may not even make sense in your environment. This leads many people to conclude that “lean does not work here.” When we hear this, we ask our students or clients to step back a bit. We might both agree that building a supermarket and using kanban is not the solution. But do not give up just yet. Let’s go back to first principles. The starting point on creating a lean flow for us is Taiichi Ohno’s description, in 1988, of what he was trying to accomplish: All we are doing is looking at the time line from the moment the customer gives us an order to the point when we collect the cash. And we are reducing that time line by removing the non-value-added wastes. Starting the Journey of Waste Reduction Chapter 3 Copyright © 2006 by The McGraw-Hill Companies, Inc. Click here for terms of use. We then ask, “Are you interested in reducing your lead time? Do you have non-value-added wastes that you can start to eliminate?” Obviously the answer is yes, every process has waste, or muda in Japanese. The foundation of the Toyota Way is based upon this simple yet elusive goal of identifying and eliminating waste in all work activities. In fact, when you look at a process as a time line of activities, material, and information flows, and chart the process from start to end, you find a depressing amount of waste— usually far more waste than value-added activity. But seeing the waste is not the same as eliminating it. The challenge is to develop a systematic method for con- tinuously identifying and eliminating waste. A sporadic removal will yield pockets of improvement, but the system-wide benefits that Toyota enjoys are achieved by following a cyclical method of continuous improvement. The key to forcing waste from the organization lies in this paradox: In order to improve, the condition must be made worse. There is no way to become truly lean without a certain amount of discomfort. Unfortunately, there is no “magic pill” or “silver bullet” that will produce the desired result without sacrifice. As we will learn later, when we link operations together, as in creating a cell, when one process shuts down, the next immediately shuts down. The pain in any part of the process immediately causes pain for the rest of the process. You might ask, “What could Ohno-san possibly have been thinking?” Some level of improvement can surely be gained without discomfort. There is always “big waste” that can be removed because there is no rational reason for its exis- tence. As an example, we recently heard of a manufacturing company that wanted to “get lean” because of the enormous amounts of inventory after every step of their process. They hired a consultant who sold them scheduling soft- ware that figured out how much inventory they needed to sustain flow in their process at each step. They then made it a policy to limit inventory following the computer model. Inventory went down, and the consultant was a hero. Nothing else changed in the process, and there was no pain. Who can beat that? Unfortunately, nothing else did improve. They got some savings based on the inventory reduction, but nagging problems of equipment downtime, long change- over times that limited flexibility, delays due to shortages of the parts the customer needed, and tons of firefighting were still the order of the day. So waste was reduced, but the root cause problems that accounted for the waste were not. And by the way, over time, the inventory levels began to creep back up. Real success comes from an improvement process for identifying waste— understanding the root cause and putting in place true countermeasures to this cause. Unfortunately, this is much more difficult than installing a piece of soft- ware. Complete success is dependent on three things: 1. A focus on understanding the concepts that support the philosophies of lean, strategies for implementation, and the effective use of lean method- THE TOYOTA WAY FIELDBOOK34 ologies, rather than focusing on mindless application of lean tools [kan- ban, 5S (see page 64), etc.]. 2. An unwavering acceptance of all aspects of the lean process, including those that produce undesirable short-term effects. This prevents “cherry picking” only those elements that do not push beyond the comfort zone. 3. Carefully conceived implementation plans that contain a systematic, cyclical, and continuous eradication of waste. Chapter 3. Starting the Journey of Waste Reduction 35 TRAP We often tour plants that have put in place beautifully laid out cells, without a deep understanding of the purpose. In one exhaust system plant a cell assembled a complete muffler out of an assort- ment of parts. It was a “one piece flow.” Unfortunately, when we happened to tour the plant certain operations had gotten ahead of others, and they did not have space for the subassemblies they were building. So they began to pile them up on the floor. Rather than stop producing, they continued to overproduce and pile parts on the floor. The plant manager smiled nervously and said, “We try to train them but they do not understand the concept of one piece flow.” He went over and yelled at the offending worker, and then we continued walking. This indicated a lack of clearly defined procedures (standards), an unwillingness to deal with uncomfortable situations, and a lack of “stop and fix problems immediately” mentality. The plant manager did not truly under- stand or embrace the philosophies of the Toyota Way. He had gotten the form but not the substance of flow. Toyota has identified seven major types of non-value-adding activities in business or manufacturing processes, which we describe below. You can apply these to product development, order taking, and the office, not just a produc- tion line. There is also an eighth waste, which we have included in our list. 1. Overproduction. Producing items earlier or in greater quantities than needed by the customer. Producing earlier or more than is needed gener- ates other wastes, such as overstaffing, storage, and transportation costs because of excess inventory. Inventory can be physical inventory or a queue of information. 2. Waiting (time on hand). Workers merely serving as watch persons for an automated machine, or having to stand around waiting for the next processing step, tool, supply, part, etc., or just plain having no work because of no stock, lot processing delays, equipment downtime, and capacity bottlenecks. 3. Transportation or conveyance. Moving work in process (WIP) from place to place in a process, even if it is only a short distance. Or having to move materials, parts, or finished goods into or out of storage or between processes. 4. Overprocessing or incorrect processing. Taking unneeded steps to process the parts. Inefficiently processing due to poor tool and product design, causing unnecessary motion and producing defects. Waste is generated when providing higher quality products than is necessary. At times extra “work” is done to fill excess time rather than spend it waiting. 5. Excess inventory. Excess raw material, WIP, or finished goods causing longer lead times, obsolescence, damaged goods, transportation and storage costs, and delay. Also, extra inventory hides problems such as production imbalances, late deliveries from suppliers, defects, equipment downtime, and long setup times. 6. Unnecessary movement. Any motion employees have to perform during the course of their work other than adding value to the part, such as reach- ing for, looking for, or stacking parts, tools, etc. Also, walking is waste. 7. Defects. Production of defective parts or correction. Repairing of rework, scrap, replacement production, and inspection means wasteful handling, time, and effort. 8. Unused employee creativity. Losing time, ideas, skills, improvements, and learning opportunities by not engaging or listening to your employees. Ohno considered the fundamental waste to be overproduction, since it caus- es most of the other wastes. Producing earlier or more than the customer wants by any operation in the manufacturing process necessarily leads to a buildup of inventory somewhere downstream. The material is just sitting around waiting to be processed in the next operation. We should note that the main reason the first seven wastes are so critical, according to Ohno, is because of their impact on what we are calling the eighth waste. Overproducing, inventory, etc., hide problems, and then team associates are not forced to think. Reducing waste exposes problems and forces team associates to use their creativity to solve problems. The remainder of this chapter presents a big picture view of waste reduc- tion. We discuss it in relation to the broader philosophy of the Toyota Way. We also discuss value stream mapping as a methodology for building a big picture view of waste reduction. In Chapters 4 through 9 we go into more detail about specific tools and methodologies for waste reduction in the value stream. THE TOYOTA WAY FIELDBOOK36 Developing a Long-Term Philosophy of Waste Reduction In recent years there seems to be an almost maniacal rush to “get lean,” as if there is a finish line in the process. Rapid results and large gains are, of course, part of the allure of the Toyota Way, and there is nothing wrong with the expectation of large benefits. The problem occurs when the short-term push for results crosses paths with some of the philosophical elements, which require a long-term view. For example, we have led many focused improvement activities, sometimes called the “kaizen blitz” or rapid improvement event. It is exhilarating to see the waste, come up with innovative ideas for waste reduction, and actually make the changes right then and there. The results are almost always astounding to the participants. The new process takes a fraction of the space, there is a clearer understanding of flow, often fewer people are needed, and equipment that had been overproducing is often surplused. The team disbands after a big celebration. But two weeks later the process keeps stopping, some operations are overpro- ducing, the visual management board is not kept up, and it’s business as usual, fighting one fire after another. The typical problem is that none of the support systems were put in place to sustain what was accomplished in the one-week event. Skilled leadership is absent, for example. Standardized plans for reacting to breakdowns are lacking. There is no good process for daily equipment maintenance. Standardized work may be posted, but it is not understood or followed. The unseasoned manager who does not understand will start to revert to the old process, allowing inven- tory to build up and trying to drive production through brute force methods to chase the schedule. The Toyota Way is to build a lasting learning organization in which prob- lems are constantly surfaced and team associates are equipped with the tools to eliminate waste. When this occurs, you are developing a long-term capability for improvement and adaptation to the environment. A well-executed kaizen workshop can be a step in teaching people what is possible. But it should be part of a longer term strategy for developing lean value streams and ultimately a lean enterprise. One useful tool for guiding improvements based on a care- fully thought-through plan is value stream mapping. Value Stream Mapping Approach Improving isolated processes seems to come more naturally than improving flow across value streams. You can see this in the way most plant tours are conducted. The tour usually starts at the raw material receiving dock, and we might see Chapter 3. Starting the Journey of Waste Reduction 37 trucks being unloaded and then walk to the first process that adds value. The tour guide gives a detailed explanation of that manufacturing process, mar- veling at any new technology like machine vision inspection or laser welding. We walk past piles of inventory, hardly noticing, then take a detailed look at the next value-added process. Often, a lean expert will ask to conduct the tour in reverse, starting with the shipping dock. This is not just a gimmick or a clever trick. Beginning at the end of the flow allows the lean expert to understand material flow from the cus- tomer’s perspective. They do not want to know where material is going next, they want to know where it comes from. Is it being pulled from this process or is an earlier process pushing it whether it is needed or not? This will be the basis for the development of the “future state.” Lean experts will ask questions about the rate of customer demand [takt in the Toyota Production System (TPS)] and how many days of finished goods inventory is being held. They go to the final operation that adds value, often an assembly operation, and ask how the operator knows what to make, in what quantity, and when to make it. They quickly lose interest in the tour guide’s detailed discussion of the nifty automated process that is continuously monitored by computer. The lean experts are looking at the operation from a value stream perspective. Individual processes need to be stabilized, but the reason for that is to support the flow needed to give the customers what they want, in the amount they want, when they want it. Toyota’s Operation Management Consulting Division (OMCD) was created by Taiichi Ohno to lead major TPS projects and teach TPS by doing. He wanted a tool to visually represent the flow of material and information and pull people back from dwelling on individual processes. Ultimately, that led to what we now call “value stream mapping,” and what Toyota calls the “Material and Information Flow Diagram.” Originally, this methodology was passed on within Toyota through the learning by doing process—mentors trained mentees by assigning them to work on projects. There was no documentation on how to develop the Material and Information Flow Diagram, and in fact the name didn’t come until long after the method was being used. Mike Rother and John Shook changed that by writing Learning to See (Lean Enterprise Institute, version 1.3, 2004), in which they teach the methodology by walking the reader through a case study on Acme Stamping. You learn how to develop a current state map on one piece of paper that shows your material flow and the information flow that triggers the material flow, and you can see the waste in your value stream. You calculate the value- added ratio—the ratio of value-added time to total lead time—then learn how to develop a future state map: material and information flow based on flow and pull and building to the customer rate of demand, or the takt time. From there you develop a detailed action plan and do it. THE TOYOTA WAY FIELDBOOK38 [...]... true flow The power of lean is in the future state system 40 THE TOYOTA WAY FIELDBOOK 2 The future state map represents the concept of what you are trying to achieve The map does not show the specific details of how it will be constructed For example, the symbol for a supermarket represents the customer and the storage of materials to satisfy the needs of the customer The actual setup of the supermarket... improvement The philosophy is that we need to straighten out the overall flow of the value stream before we deep-dive into 42 THE TOYOTA WAY FIELDBOOK fixing individual processes The point of improving individual processes is to support the flow The maps also provide a “common language” and understanding so that everyone has the same vision Like a road map, the value stream mapping tool shows the road for the. .. improve The engine plant, for one, was asked to reduce total costs by 40 percent—an astounding number But by 20 04, they were well on the way to achieving these aggressive goals And in the process, TPS was tightening up 52 THE TOYOTA WAY FIELDBOOK across the operations, leading to major improvements in productivity, quality, and safety Sequential and Concurrent Continuous Improvement Initially the implementation... After you have mastered the ability to observe and identify waste, it is possible to document the situation using the standardized work tools Often standardized work is thought to be mainly a set of instructions for the operator In reality one of 62 THE TOYOTA WAY FIELDBOOK the most powerful uses of standardized work is for analyzing and understanding waste in the operation The documented work procedure... TRAP The Fallacy of Perfect Stability We were involved as consultants in the early day of the implementation of the Ford Production System, modeled after the Toyota Production System There was general agreement on the importance of process stability before moving to the higher levels of lean There was also a strong belief that all plants around the world (over 130) had to move forward in roughly the. .. despair! The purpose of the current state map is to understand the nature of the processes so that an effective future state can be created TIP Make the Level of Detail Fit the State of the Process During the initial cycle through the continuous improvement spiral, data collected from the process may not be completely “clean.” This is often the case prior to achieving a baseline of standardization (on the. .. say that the tools are simply used to aid in identifying waste There are three critical elements in analyzing the work and identifying waste during the stability phase: 1 Identify the basic work steps 2 Record the time for each step 3 Draw a picture of the work area and the operator’s flow within the area Bear in mind that the intent is to identify waste, and it is important to start with the “big”... changing from one product to another quickly (within a few minutes)?” Indicators of inflexibility include long setup times and high volume production runs It’s also important to evaluate whether the previous process is 44 THE TOYOTA WAY FIELDBOOK capable of delivering product in the required variety As you observe the operations, identify the method currently used to compensate for the process incapability... leveling) within the entire value stream will cause the weakest link to “break” and become unstable again This is the link that will require focused attention and a return through the continuous improvement cycle 54 THE TOYOTA WAY FIELDBOOK Reflect and Learn from the Process 1 Before you begin your waste reduction journey, take time to assess the potential challenges you will face compared to the potential... inflexibility Toyota considers inventory to be an indicator of “weakness” in the process, and the inventory is a constant reminder of the need to strengthen the process Many people misinterpret this concept to mean that there should be no inventory within the process Ideally this would be the case, but realistically some processes are currently not capable of operating without some inventory Toyota is always . Don’t despair! The purpose of the current state map is to understand the nature of the processes so that an effective future state can be created. THE TOYOTA WAY FIELDBOOK4 2 TIP Make the Level of. flexi- bility of the value stream and shortens the lead-time. The inventory level in THE TOYOTA WAY FIELDBOOK4 6 the supermarket is maintained at the lowest possible level, and only remains low until the value. had gotten ahead of others, and they did not have space for the subassemblies they were building. So they began to pile them up on the floor. Rather than stop producing, they continued to overproduce