Lean Systems

Lean systems are built on the principle of defining value from the viewpoint of
the customer, and they aim to continually improve their system by eliminating every waste that does not contribute to the value of the product.

Lean systems have the objective to maximize customer value while minimizing waste. A lean system designs its processes to continuously increase customer value with the ultimate goal to achieve perfect value with zero waste. Eliminating waste over the whole business creates a system that requires less effort, less space, less time and less costs with fewer defects, compared to traditional systems. Firms that apply the lean systems approach can become more competitive by being able to respond to changing customer requirements
with higher variety, higher quality, lower cost and fasterthroughout times. Lean systems approach is a way of thinking rather than a simple tactic or a program.

Lean systems are built on the principle of defining value from the viewpoint of the customer, and they aim to continually improve their system by eliminating every waste that does not contribute to the value of the product. Lean tries to improve value with less work to provide perfect value to the customer with a perfect value creation process with zero waste (Skhmot, 2017). Lean systems focus on producing exactly what the customer wants, when the customer wants with less resources.

“Continuous improvement” and “respect for people” are the two main pillars of lean systems. Lean systems always aim to design better processes and search for improvement. The concept of “kaizen”, which means continuous improvement, has a very important place in lean systems. Lean philosophy also includes respect for people. It aims to benefit from human potential by including
workers in decision processes and caring about their ideas in order to improve their work. Leaders of lean systems often spend their time advising and actively working with their workers to identify problems and to improve their systems by eliminating wastes.

Lean approach is commonly applied in manufacturing systems, however, it is suitable for every type of business and process, such as service systems including healthcare, finance, etc. Even though lean systems approach started with the Toyota production system over 70 years ago, it is widely adopted today across various industries all over the world.

Five main principles of lean systems are: value, value stream, flow, pull and perfection.

Value: Lean systems approach starts with understanding the value of products and services for the customers. Value is defined by what the customer is willing to pay for. Companies need to apply different methods to understand what their
customers want. Womack and Jones (2003) state that: “The critical starting point for lean thinking is value. Value can only be defined by the ultimate
customer. And it’s only meaningful when expressed in terms of a specific product (a good or service, often both at once) which meets the customer’s needs at a specific point in time.” Value needs to be specified from the end customer’s standpoint and it also defines the price. Then, the companies need to focus on eliminating waste to deliver the value that the customer expects at lowest cost and highest profitability.

Value stream is the combination of all steps and processes over the entire life cycle of products or services.

Value Stream: Value stream is the combination of all steps and processes over the entire life cycle of products or services, from the raw materials until
the delivery of the end result to the customers. In order to apply lean systems approach, thevalue stream should be accurately and completely understood. Mapping the value stream as a diagram might be the best way to understand it. Each step and process in the transformation of the product or service can be traced and analyzed through the map of the value stream. Each process needs
to be analyzed to determine what value it adds to the product. As a result of the analysis of the value stream, many steps will be found to create value. But, there will also be many steps that creates no value and every step that does not add value is defined as a waste and needs to be eliminated, if possible. However, some of these steps cannot be eliminated under the current technology, even though they are also defined as waste.

Flow is the creation of a chain of valueöadding steps with no interruption between the processes.

Flow: Flow is the creation of a chain of value adding steps with no interruption between the processes. In a flow setting, each activity should be fully in line with the others and value-creating steps should be sequenced tightly one after the other, so that the product flows smoothly from the beginning to the end customer. If the value adding steps do not move forward at any point, it leads to the creation of waste.

Pull: In a flow setting, pull principle states that nothing should be made until it is needed by the next step. The classical push systems, such as Ford’s mass production system, was focused on making production in large quantities. However, pull principle requires that no process should be made ahead of time and all inventories should be eliminated. All production should be done in a synchronized setting such that each process should be completed exactly when it is needed by the next step. This principle is related to the Justin-Time idea. In this system, products are not built in advance and expensive inventory costs are
eliminated. In addition, customer expectations can be better met since production is only started after the customer gives the order and products can be produced according to customer specifications. However, this system requires great flexibility in the production process and efficient ways of communication and thus the production system should be designed accordingly.

Perfection: Perfection principle aims to reach to a perfect system that satisfies the customer expectations completely by producing the highest quality products in a very short time at a very low cost by eliminating all waste from the system. After the four steps defined above are accomplished, these steps should be re-applied over and over again until a system with perfect value is created
with no waste. Lean approach propose continuous improvement, also called Kaizen, such that the system is perfected over time.

Kaizen is a lean principle that means continuous improvement.

Kaizen is a Japanese term for continuous improvement and has an important place in lean systems. It proposes to continually improve activities, processes and products to satisfy customer needs. It focuses on value-added activities and aims to eliminate waste. Kaizen requires all employees at all levels of the company work together to improve the system. Kaizen essentially uses a strategy composed of 4 phases known as the PDCA cycle: Plan (P), Do (D), Check (C), Act (A).

Plan: In this phase the problem or the improvement opportunity is identified and
analyzed. In this step, the current situation is analyzed, objectives are clearly determined, solution alternatives are identified, and a plan is made to improve the system.

Do: In this phase, potential solutions are implemented and tested on a small scale of the real system and data is collected about the results.

Check: In this phase, the collected data and the results are analyzed and their effectiveness are measured. Unexpected issues and their causes are also identified in this step, and key learnings are obtained. Do and Check steps might be repeated many times until the expected results are obtained and determined objectives are reached. The best solution is decided as a result of Check phase.

Act: In this phase, the decided solution is implemented on a full scale and this level is used as the new standard. Standardizing, documenting, integrating it into the organization’s system and sustaining the improved process are also applied in this step.
After the Act phase, new improvement opportunities are identified and the PDCA cycle is started again at the Plan phase for continuous improvement. PDCA cycle is also known as “Deming Wheel” or “Shewart Cycle” since it is defined by Shewart and developed by Deming later on. Kaizen strategy is based on many, small improvements rather than radical changes that generally arise as a result of Research & Development. Small improvements generally do not require high
capital investments and thus they are easier to be accepted by the managers and implemented in a fast manner. A successful implementation of Kaizen requires the participation of workers. Generally a group of 6-8 workers is formed and they meet regularly over a short period of time. Improvement ideas are expected to come from the workers themselves, thus all employees should continually seek ways to improve the system. This strategy encourages workers to own their work and strengthens teamwork. It also improves worker motivation. Since workers take place in this process from beginning to the end, it makes the acceptance and implementation of the solution much easier at
the factory floor.
In a typical Kaizen study, generally the current process is analyzed first by a group of workers using different techniques. A problem, waste or defect is
identified and objectives are determined. Then, improvement ideas are developed and immediate action is taken if these ideas are accepted by the
managers. The benefits of the study are measured by comparing the improved system results with the previous system. Then, new problems or improvement opportunities are searched with the objective of continuous improvement.

In a PDCA cycle, Do and Check steps might be repeated many times until the expected results are obtained and determined objectives are reached.

3Ms of lean systems; Muda (waste), Mura (unevenness) and Muri (overburden) are the main factors that cause inefficient use of resources, and should be eliminated.

Lean systems aim to eliminate waste (Muda), which is defined as anything that does not add value for the customer. Some activities that do not directly add value to the product might be necessary, such as inspection and safety testing.
These activities are also considered as Muda.
However, more importantly, there are several nonvalue added activities that are also unnecessary for the customer and they should be eliminated. Originally, 7 types of such waste were defined by Taiichi Ohno as Defects, Transportation, Overprocessing, Overproduction, Inventory, Waiting, and Motion.

Muda (waste) is anything that does not add value for the customer.

Defects: Defects are incurred when the final product does not meet the customer specifications. In such cases, a loss of value and a waste happens due to the scrap, repair, or rework of the product. These processes cause additional costs in the system. Quality problems in the production, excessive variation in processes, high inventory levels, inappropriate equipment, insufficient training or workers, or damages that happen during transportation and handling are the main reasons of defect waste. In order to eliminate this waste, all these reasons should be eliminated and processes should be designed so that they do not lead to defects.

Standardized and consistent processes should be used with lower variations. In addition, a system that can detect abnormalities in the production process as soon as possible should be developed.

Transportation: Unnecessary movements of products, materials, tools, inventory, equipment, etc. are considered as the transportation waste. These movements do not add any value to the product and lead to unnecessary work, loss of effort and time, and also can cause damages to the products. In order to avoid such waste, several measures can be applied such as developing a U-shaped production line, locating facilities that have more interactions closer to each other, creating flow between processes, avoiding unnecessary handling of materials, decreasing work-in-process inventories etc.

Overprocessing: Overprocessing means doing more than what the customer requires. Adding more components to the product, doing more work than required, or having more steps in a product or service are considered as overprocessing since these operations are not wanted by the customer
and thus they have no value for the customer. Some examples are running more analysis than needed, using a higher precision equipment than necessary, having more functionalities in a product than needed, generating more detailed reports than needed, requiring unnecessary signatures or more forms than needed (Skhmot, 2017). In order to avoid overprocessing, all the requirements should
be understood from the customer’s standpoint and production should be done to the level of quality and expectation of the customer.

Overprocessing means doing more than what the customer requires.

Overproduction: Overproduction is producing more than, faster than or before than it’s needed. Overproduction causes high inventory costs, high
lead times, wastage, prevents smooth flow of work and hides defects. Instead of overproduction, lean systems approach utilizes the Just-in-Time strategy such that all the production is done only when it is needed at the exact quantity that is needed. There are also several other strategies to avoid overproduction
such as using the “Takt Time” to ensure evenness between the rates of manufacturing at different stations. In addition, reducing setup times to be
able to produce in small batches, or using a pull or “Kanban” system to control the amount of workin-process can help to avoid overproduction.

Inventory: All inventory that is more than necessary for a steady production flow in a Just-inTime manner is considered as waste. Excess inventory can cause many problems such as higher lead times, damages to the products and inefficient allocation of capital. In addition, inventories hide the problems
in the production process and cause the problems to continue without being solved. Inventory waste is mainly caused by overpurchasing, overproduction,
inaccurate forecasting, inefficient or unbalanced processes, long setup times or poor inventory planning. In order to avoid inventory waste, Justin-Time strategy should be applied effectively and buffers between processes should be reduced.

Waiting: Waiting refers to any idle time during the production of a product. Idle machines or workers waiting for material or equipment, production bottlenecks or production waiting for operators are considered as the waiting waste, which is generally caused by the lack of synchronization between the processes. Waiting
can also be caused by long setup times, machine breakdowns, inconsistent work methods or lack of proper equipment or materials. In order to avoid waiting waste, processes should be designed as a continuous flow, workloads should be leveled by standardized work instructions, and flexible multiskilled workers should be used.

Motion: Motion waste is defined as any unnecessary movement of people that doesn’t add value to the product including walking, lifting, reaching, bending, stretching, and moving types of wastage. Motion waste is generally
caused by inappropriate facility layouts and poor organization of the workplace. In order to avoid the motion waste, the workplace should be organized such that movement requirements are minimized, equipments should be placed close to
the production location and materials should be located ergonomically to reduce reaching, bending or stretching requirements.

Any unnecessary movement of people that doesn’t add value to the product including walking, lifting, reaching, bending, stretching, and moving, are considered as the Motion waste.

In addition to the original seven types of waste as stated above, it should be noted that, later on, additional types of waste are also defined such as unutilized talent or skills of workers, unused resources, space or by-products of the processes.

Mura means unevenness and imbalance of processes. Inconsistency between the activities, or non-uniformity and irregularity of the processes cause Mura, and Mura causes the wastes stated above. For example, in a production environment, if the capacity of one station is less than the others, a bottleneck occurs there, overproduction and accumulation of excess inventory is observed at the previous stations while waiting is observed at the next stations. In addition, some of the excess inventory might need to be transported to other
locations due to space limitations and these excess inventory can be damaged during the handling process causing defects. All of these wastes of inventory, overproduction, waiting, defects and transportation are caused by the unevenness in the system. Lean systems aim to balance the workloads so that there is no Mura leading to waste. In order to avoid Mura, Takt Time, Just-in-Time, Kanban and other pull-based strategies can be utilized.

Muri is to cause overburden, meaning to give excessive or unreasonable work beyond one’s power, causing unnecessary stress to workers.

Muri is to cause overburden, meaning to give excessive or unreasonable work beyond one’s power, causing unnecessary stress to workers. Muri can be
caused by Mura such that uneven workloads can cause some workers to be overburdened. Also, other problems in the system, such as lack of training,
undefined or unclear work instructions, inappropriate work assignments, excessive performance measures etc. can cause Muri. Muri is also observed when workers or machines are utilized over their capabilities to complete a task. Muri may result in worker absenteeism, fatigue, illness, problems in worker health, work accidents and breakdowns of machines. In order to avoid Muri, activities should be standardized and workloads should be evenly distributed according to worker capabilities.
Lean systems approach aims to eliminate Muda, Mura and Muri and the first step to reduce these wastes is to recognize their existence. There are many tools and techniques in lean systems that aim to identify and eliminate waste. Value stream mapping can be used to analyze the current system to identify
the value-added activities, non-value-added activities and wastes. All the processes should be looked over with the customer requirements in mind and a plan should be developed to eliminate all unnecessary activities that do not add value for the customer.
However, it should also be noted that completely eliminating 3Ms might not be realistic. For example, unless everything in the factory is placed next to each other, there will always be some sort of transportation. Similarly, there will
always be some motion of people such as walking or reaching for a material during production. The same holds for Muri. There can always be a time where machines or workers have to provide a little extra effort or time to satisfy the customer demand. Even Mura may not always be reduced with 100%. For example, different products might require different materials, different process times or different workloads. It might not always be possible to completely even out these workloads and some level of unevenness might exist. We should focus on reducing these 3Ms as much as we can, even though they can not be totally wiped out.

TQM is a continuous improvement management concept and aims to reduce defects by standardizing each process and making the perfect production at the first time with very little variation to increase customer satisfaction.

In order to achieve the highest quality, TQM aims to prevent defects during production, rather than determining them at the quality control phase
after the production. According to TQM, mistakes should be determined and prevented at their source. One of the main mechanisms to prevent mistakes
is called poka yoke which means mistake proofing or avoiding inadvertent errors. Poka yoke aims to design systems such that incorrect operation is prevented. It aims to prevent defects from occurring in the first place, and if it is not possible,
it aims to detect and eliminate errors as early as possible. For example, a two-hand operating device is a poka yoke used to reduce injuries by requiring
the operator to use both of their hands to control the machine. Child-proof electric sockets or the washing machine that does not start if the door is
not closed properly in order to prevent flooding are other examples of poka yokes.

One-piece flow requires that manufacturing is done one piece at a time (or a small batch at a time) with no WIP inventory such that parts are continuously moved from one station to the next without waiting in between.

One-piece flow works best with a cellular (generally U-shaped) layout.

Kanban is a visual method for controlling production in lean systems as a part of the pull approach.

Kanban utilizes a system of cards or signals through the value stream to pull product from customer demand back to raw materials.

5S is a methodology that aims to create a clean, uncluttered, safe, and well organized workplace to reduce waste and increase productivity.

5S words are Seiri (Sort), Seiton (Set in order), Seiso (Shine), Seiketsu (Standardize) and Shitsuke (Sustain).

Seiri (Sort): In this first phase, all items in a workplace are sorted and necessary items are distinguished from unnecessary ones. Items that are not needed are removed from the workplace.

Seiton (Set in order): In this second phase, fixed locations are defined for all necessary items and they are placed at their optimal locations depending on their usage. There should be a place for everything that is easy to access, and everything should always be located at their own place so that the right item can be picked efficiently, without waste, when needed.

Seiso (Shine): In this third phase, the workplace should be cleaned and all garbage, dirt, dust etc. should be eliminated. The workplace including, equipments, machines etc. should always be kept clean and root causes of dirtiness should be determined and wiped away. It will always be easier to identify and solve problems in a clean work space.

Seiketsu (Standardize): In this fourth phase, standards for always keeping the work environment clean and neat should be set. The procedures and schedules for repetitively applying the first three phases should be established. The clean
environment with everything in order should be the new standard of the workplace.

Shitsuke (Sustain): In this last phase, the established standards should be maintained over the long term. In order to achieve this, workers should develop a self-discipline and change their behaviors and habits to always keep their workplace clean and tidy. This is generally the hardest step of 5S since it is generally observed that, even though the workers clean their workplace at first, they have a hard time keeping it clean in the long run.

SMED is a technique to reduce the equipment changeover times.

In a basic SMED application, the first step is identifying the internal and external elements of the changeover process. External elements should be completed before the machine is stopped and everything that is required for the internal elements should be ready when the machine is stopped. Then, in the second step, each internal element should be analyzed and new ways of doing things should be searched in order to convert internal elements into external ones, if possible. We need to ask ourselves whether it might be possible to complete
a currently internal element without stopping the machine, such that it is converted into an external one. Finally, in the third stage, each internal and
external element should be simplified as much as possible and unnecessary activities should be eliminated.