Section I: Lean Methodology
What is Lean?
Lean is a systematic approach to reduce or eliminate activities that don't add value to the process. It emphasizes removing wasteful steps in a process and taking the only value added steps. The Lean method ensures high quality and customer satisfaction.
It helps in:
- Reducing process cycle time,
- Improving product or service delivery time,
- Reducing or eliminating the chance of defect generation,
- Reducing the inventory levels and
- Optimizing resources for key improvements among others.
It is a never-ending approach to waste removal, thus promotes a continuous chain of improvements.
What is "Value"?
Let us first understand what "Value" is, in the above description of Lean. Depending on the type of business process and industry context, it is the customer who defines "value". So "Value" is related to the customer's perception of product(s) or service(s) that he or she is willing to pay for.
A business process is set of activities that convert inputs into outputs using resources. In any process, these activities can be classified into three types. They are:
- Value-added activity: These activities add value to the process and are essential. They improve processes for productivity and quality.
- Enabling value-added activity: These activities do not add value to a customer but they are necessary for continuity of a process.
- Non-Value-added activity: These activities do not add any value to the processor products. They form the wasteful steps. A customer doesn't pay for the costs associated with these activities willingly. Rather, if evident and excessive, they result in customer dissatisfaction.
In any process, almost 8085% activities are non-value adding activities. The aim of the LEAN approach is to identify them in the process. And use specific lean tools to eliminate or reduce them. Thus, Lean improves process efficiency.