MODULE 7 : LEAN ENTERPRISE

SECTION 1 : LEAN PRODUCTION

OBJECTIVES

What Is Lean Enterprise?

Lean enterprise
 is a business principle aimed at minimizing
production process waste and maximizing
efficiency to create greater product value.
 refers to a production principle stating that
any component of a business enterprise that
fails to directly benefit a final product is
superfluous.
 Focuses on value creation while eliminating
waste and non-essential processes.
Understanding Lean Enterprise
 Lean enterprise is sometimes simply referred to as "lean."
 Although both terms came into popular usage in the 1990s, the concept itself was devised by
Toyota Motor Corporation when it introduced the Toyota Production System (TPS).
 Developed by Eiji Toyoda and Taiichi Ohno, the Toyota Production System (TPS)
integrated socio-technical management philosophy and was practiced between 1948 and 1975
 The lean enterprise philosophy was also inspired by telecommunications giant Motorola,
which implemented a manufacturing principle known as Lean Six Sigma in 1986.
 This quality-control methodology uses a data-driven review to limit mistakes and defects in
the production process.
Lean Tools and Techniques
 Value Stream Mapping (VSM)
 5S (Sort, Set in order, Shine, Standardize, Sustain)
 Kaizen (Continuous Improvement)
 Kanban
 Just-in-Time (JIT)
 Root Cause Analysis (e.g., 5 Whys, Fishbone Diagram)

Creating a Lean Culture

 Leadership and employee involvement
 A successful Lean transformation requires committed leadership and active employee
engagement at all levels.
 Change management
 Communication and transparency
Leadership and employee involvement
 A successful Lean transformation requires committed leadership and active employee
engagement at all levels.
 Leadership Roles:
 Lead by Example
Leaders must model Lean behaviors—problem-solving, respect for people,
continuous improvement.
 Set Vision and Direction
Clearly communicate the "why" of Lean.
 Empower Team
Give employees ownership over processes and decisions.
 Support Experimentation
Encourage risk-taking, learning from failure.

 Employee Involvement:
 Cross-Functional Teams
Involve employees from different departments in process improvement.
 Kaizen Events
Employees contribute to identifying and eliminating waste.
 Suggestion Systems
Create channels for employees to offer improvement ideas.
 Recognition and Rewards
Celebrate small wins and recognize contributors.

Change Management
 Transitioning to a Lean Enterprise involves a cultural shift that must be carefully
managed.
 Key Change Management Strategies:
 Build Urgency
Help teams understand the need for change (e.g., customer demands, competition).
 Involve Stakeholders
Get buy-in from those affected by changes early in the process.
 Training and Development
Equip employees with Lean tools and knowledge.
 Pilot Projects
Start small, demonstrate results, and scale gradually.
 Resistance Management
Listen to concerns and provide reassurance/support.

 Change Models to Consider:

 Kotter’s 8-Step Change Model
 ADKAR Model (Awareness, Desire, Knowledge, Ability, Reinforcement)

Kotter’s 8-Step Change Model

1. Create a Sense of Urgency
2. Build a Guiding Coalition
3. Form a Strategic Vision and Initiatives
4. Communicate the Vision
5. Empower Employees for Action
6. Generate Short-Term Wins
7. Sustain Acceleration
8. Anchor New Approaches in the Culture

ADKAR Model
1. Awareness
Why is this change necessary?"
 Help individuals understand the reason for change.
 Communicate threats, opportunities, or business drivers.
 Be transparent about the consequences of not changing.

2. Desire
"Do I want to be part of this change?"
 Build motivation and engagement.
 Show how the change benefits the individual/team.
 Address fears and resistance with empathy.

3. Knowledge
"How do I change?"
 Provide training, coaching, and mentoring.
 Share Lean principles, tools, and success stories.
 Clarify new roles, expectations, and processes.

4. Ability
"Can I do this?"
 Give employees opportunities to practice and apply new skills.
 Provide resources, systems, and time for implementation.
 Support ongoing problem-solving.

5. Reinforcement
"How do we make it stick?"
 Recognize progress and reward desired behaviors.
 Align performance evaluations with Lean goals.
 Regularly review and sustain improvements.

 Communication and Transparency

 Clear and open communication is vital for Lean to take root and thrive.
SECTION 2 : LEAN THINKING

What is Lean?
 is a way of thinking about creating needed value with fewer resources and less waste.
 is a practice consisting of continuous experimentation to achieve perfect value with
zero waste.
 Lean thinking and practice occur together.
Lean thinking always starts with the customer.
What does the customer value? Or, stated differently and in a way that invites concrete action,
what problem does the customer need to solve?
Lean practice begins with the work — the actions that directly and indirectly create value
for the customer — and the people doing that work. Through ongoing experimentation, workers and
managers learn by innovating in their work — be it physical or knowledge work — for increasingly
better quality and flow, less time and effort, and lower cost. Therefore, an organization characterized
by lean practice is highly adaptive to its ever-changing environment when compared to its peers
because of the systematic and continuous learning engendered by lean thinking and practice.
A lean enterprise is organized to keep understanding the customer and their
context, i.e., specifying value and looking for better ways to provide it:
 through product and process development,
 during fulfillment from order through production to delivery, and
 through the product’s and/or service’s use cycle from delivery through maintenance
and upgrades to recycling.
Lean Enterprise Principles
According to Lean Thinking: Banish Waste and Create Wealth
in Your Corporation, co-written by economists James Womack
and Daniel T. Jones, lean enterprise is characterized by the
following five chief tenets:
1. Value
 This pertains to the manner in which end
customers value a certain product or service as it
relates to their wants or needs.
2. Value stream
 This breaks down the life cycle of a product or
service, including the acquisition of raw
materials, the manufacturing of goods, the sale
and delivery of inventory, and the ultimate consumption of items by end-users.
3. Flow
 If any iteration of the value stream is stagnant or inefficient, it is considered wasteful
and antithetical to creating customer value.
4. Pull
 This is a directive stating that nothing should be produced until there is clear demand
or official purchase orders from customers.
5. Perfection
 This tenet states that in order for Lean Enterprise to be successful it needs to become
part of the company culture, where every employee plays a role in implementing and
perfecting the Lean Process.
Define Value
To better understand the first principle of defining customer value, it is important to
understand what value is.
Value is what the customer is willing to pay for. It is paramount to discover the actual or
latent needs of the customer. Sometimes customers may not know what they want or are unable to
articulate it. This is especially common when it comes to novel products or technologies. There are
many techniques such as interviews, surveys, demographic information, and web analytics that
can help you decipher and discover what customers find valuable. By using these qualitative and
quantitative techniques you can uncover what customers want, how they want the product or service
to be delivered, and the price that they afford.
Map the Value Stream
The second Lean principle is identifying and mapping the value stream. In this step, the goal
is to use the customer’s value as a reference point and identify all the activities that contribute to these
values. Activities that do not add value to the end customer are considered waste.
The waste can be broken into two categories:
1. non-valued added but necessary and
2. non-value & unnecessary.
The later is pure waste and should be eliminated while the former should be reduced as much
as possible. By reducing and eliminating unnecessary processes or steps, you can ensure that
customers are getting exactly what they want while at the same time reducing the cost of producing
that product or service.
Create Flow
After removing the wastes from the value stream, the following action is to ensure that the
flow of the remaining steps run smoothly without interruptions or delays. Some strategies for ensuring
that value-adding activities flow smoothly include: breaking down steps, reconfiguring the production
steps, leveling out the workload, creating cross-functional departments, and training employees to be
multi-skilled and adaptive.
Establish Pull
Inventory is considered one of the biggest wastes in any production system.
The goal of a pull-based system is to limit inventory and work in process (WIP) items while
ensuring that the requisite materials and information are available for a smooth flow of work.
pull-based system
 allows for Just-in-time delivery and manufacturing where products are created at the
time that they are needed and in just the quantities needed.
 are always created from the needs of the end customers.
By following the value stream and working backwards through the production system, you
can ensure that the products produced will be able to satisfy the needs of customers.
Pursue Perfection
Wastes are prevented through the achievement of the first four steps:
1) identifying value,
2) mapping value stream,
3) creating flow, and
4) adopting a pull system.
However, the fifth step of pursuing perfection is the most important among them all. It makes
Lean thinking and continuous process improvement a part of the organizational culture. Every
employee should strive towards perfection while delivering products based on the customer needs.
The company should be a learning organization and always find ways to get a little better each and
every day.
Lean Transformation Framework
Lean enterprises, both ongoing firms and startups, endlessly address fundamental questions
of purpose, process, and people:
1. What is the value-driven purpose? Or what is the problem to solve?
2. What is the work to be done (to solve the problem)?
3. What capabilities are required (to do the work to solve the problem)?
4. What management system — operating system and leadership behaviors — is required?
5. What basic thinking, including mindsets and assumptions, are required by the organization as
a purpose-driven socio-technical system?

Lean thinking has a moral compass: respect for the humanity of customers, employees, suppliers,
investors, and our communities with the belief that all can and will be better off through
lean practices. Lean is not dogmatic. It’s not a rigid, unchanging set of beliefs and methods.
Instead, it progresses in the context of specific situations. There is no endpoint as long as value is
imperfectly created, and waste exists.
SECTION 3 : WASTE ELIMINATION STRATEGIES (MUDA, MURI, MURA)

TYPES OF WASTE IN LEAN

3 Types of Waste in Lean:

1. Muda
2. Muri
3. Mura

Muda (Non-Value-Added Activities)

 refers to non-value-added activities
that do not contribute to the creation
of value for the customer.
 Solid waste, such as discarded
materials from households, factories,
or hospitals, is an example of such
non-value-added activities. These
activities can be eliminated or minimized to improve efficiency.
 commonly referred to as the 7 Wastes and are non-value adding processes or actions.
Examples of Muda include:
 Overproduction: producing more than what is needed
 Waiting: waiting for materials, equipment, or information
 Transportation: moving materials or products unnecessarily
 Inventory: storing excess materials or products
 Motion: unnecessary movement of people or equipment
 Defects: producing defective products
 Overprocessing: using more resources than necessary to complete a task

Two Types Of Muda:

1. Type 1
2. Type 2

Muda Type 1
 Include non-value-added activities in the processes that
are necessary for the end customer.
 For example, inspection and safety testing does not
directly add value to the final product; however, they are
necessary activities to ensure a safe product for
customers.

Muda Type 2
 includes non-value added activities in the processes, but these activities are unnecessary for
the customer. As a result, Muda Type 2 should be eliminated.

Seven Categories Of Waste Under Muda Type 2

T - transport (i.e. excess movement of product)
I - inventory (i.e. stocks of goods and raw materials)
M - motion (i.e. excess movement of machine or people)
W - waiting
O - overproduction
O - over-processing
D - defects
Muri (Overburden)
 refers to overburden or overloading of equipment,
people, or processes, with various sources of
overburden including industrial, commercial, domestic,
and agricultural sectors.
 This can lead to inefficiencies, errors, and waste.
 Expecting too much, with defining process or not
having the correct skills or tools.
 can result from Mura and in some cases be caused by
excessive removal of Muda (waste) from the process.
 also exists when machines or operators are utilized for
more than 100% capability to complete a task or in an
unsustainable way.
Examples of Muri include:
 Overloading equipment or machinery
 Assigning too many tasks to an individual or team
 Insufficient training or resources
 Unrealistic expectations or deadlines

Overburdening can cause stress, burnout, and increased likelihood of mistakes, which
ultimately results in waste. By managing workloads and ensuring adequate resources and training,
organizations can prevent Muri and maintain a more efficient and productive environment.

Muri over a period of time can result in employee absenteeism, illness, and breakdowns of
machines. Standardize work can help avoid Muri by designing the work processes to evenly distribute
the workload and not overburden any particular employee or equipment.

Mura (Inconsistency)
 refers to inconsistency or unevenness in processes or
workflows.
 Different sources of waste, such as industrial, commercial,
domestic, and agricultural, contribute to this inconsistency
and impact the overall efficiency. This can lead to
inefficiencies, errors, and waste.
 Seen as unevenness or a lack of stability and flow. This
drives the creation of Muda.
 can be avoided through the Just-In-Time ‘Kanban’ systems
and other pull-based strategies that limits overproduction and
excess inventory.
The key concept of a Just-In-Time system is delivering and producing the right
part, at the right amount, and at the right time.
Examples of Mura include:
 Inconsistent quality of materials or products
 Variability in production schedules or workflows
 Lack of standardization in processes or procedures
 Inadequate communication or coordination between teams or departments
Inconsistencies can disrupt the flow of work and create bottlenecks, leading to delays and
increased costs. By standardizing processes and improving communication, organizations can reduce
Mura and create a more predictable and efficient workflow.
Relationship between Muda, Mura and Muri

Muda, Mura, and Muri are interrelated. Eliminating one of them will affect the other two. For
example, a firm that needs to transport 6 tons of materials to a customer has several options (Lean
Enterprise Institute, 2016).

 The first option is to load one truck with all 6 tons and make a single trip. However in this
example, it would be considered Muri due to the overburden of the truck. This excess load
can lead to a breakdown.

 The second option is to divide the transportation into two trips. One with two tons and the
other with four tons. This would be considered Mura since the unevenness of the arrival of
materials to the customer can lead to problems at the receiving dock. In the first trip, the
delivery may be too little for the production necessary on-site. In the second trip, the amount
of delivered material may be too much for on-site storage and material handling. This leads to
Muri since one of the truck is overburden and the receiver is also overburden for that delivery.
Additionally, Muda can be seen from the uneven workload. This can cause employees who
receive the materials to wait around.

 The third option is to load two tons on each truck and make three trips. Even though this
option has no Mura and Muri, it has Muda since the truck would not be fully loaded on each
trip. Each truck can carry up to 3 tons of material and this option makes one unnecessary trip.
 The fourth option is to deliver the materials with two trucks each with 3 tons. In this example,
this would be the optimal level that minimizes Muda, Mura, and Muri. Muda does not exist
because the trucks are carrying the loads at their maximum capacity. There is no excess
capacity nor unnecessary trips with this strategy. Mura does not exist because the workload
between the two deliveries are uniform. As a result, there is no unevenness. And finally, Muri
is absent from this option because both the truck and the operators are not working beyond
their capacity.

In real world applications of Lean, it is not always easy or possible to find an optimal
solution. Reducing Muda can lead to Muri. The existence of Mura can be seen as a waste in
Muda. And finally Muri can lead to a breakdown in the system that will result in a large
amount of Muda and Mura. Since real world problems are dynamic and the needs of
customers are always changing, our work processes must also change as well. As we design
our processes and standardize our work, we must look at the resulting system from the lens of
these three concepts. Only by considering the impacts of Muda, Mura, and Muri and
optimizing our production strategy can we develop an efficient Lean system.