The Lean Enterprise Model & Assessment

What is lean?

Lean Enterprise Institute define the core idea for lean is “To maximize customer value while minimizing waste. Simply, lean means creating more value for customers with fewer resources”.[1] Michael Ballé has a similar definition to include people as “Lean is about increasing value (function/cost) by everyone’s voluntary participation in improving quality, lead-time and cost.You start by looking at waste, pull the andon cord, ask “why?” ask “what would you do about it?” and support people as they go about Kaizen until countermeasures point the way to larger changes”.[2]

Lean manufacturing is a topic that has been discussed for 30 yeas and applied in several ways. But from the other side, organizations are still so far to understand the concept of “Lean Enterprise” and this is the first constraint for lean due to lean concept is not only applied to manufacturing but also for business as healthcare,business service, governments etc.. Another constraint for lean is due to lean thinking focus on maximizing value and minimizing waste, these actions will cause the company or organization focus on achieving immediate results because in the short run, they have pressure proved to the customer their values which customers willing to pay. This is problematic because lean practitioners and managers should design their plan with sustainability controls for each lean project. But for the industry practice, five years (or even one year) to achieve sustainability will be a constraint when customers are unwilling to pay for operation excellence after such a long time.

What is lean enterprise?

The goal for lean enterprise is the same as lean manufacturing to maximize customer value while minimizing waste. But the lean enterprise emphasize the overall system needs to be in line with the economic, environment and social objectives of an enterprise. The aim is to fully integrate,coordinate and optimize the whole system by avoiding local improvements within individual business segments that might have a negative influence on other neighboring business areas.

The lean enterprise is rooted in seven key lean principles: optimize the whole, eliminate waste, build quality into the system, deliver fast by managing flow, create knowledge, defer commitment, and respect people [3]. All these seven lean enterprise principles are all related to three fundamental business issues, Purpose for strategy deployment, Process for value stream management and People for people enabled processes. The lean enterprise model is as figure 1 indicate.

Fig. 1. The Lean Enterprise Model

Lean Enterprise Assessment

Lean enterprise start from Purpose — Strategy Deployment,the vision, goals and strategy are clearly communicated throughout the organisation with key measures, targets and activities appropriately deployed, then focus on People — People Enabled Process to make sure accountability are clear at all levels and leaders create a culture in which lean dispositions flourish.The third important factor is Process — Value Stream management which include build quality into the system,deliver fast by manage flow and eliminate waste.Keep improving these 3P principles (Purpose,People,Process) can guide organization toward a stronger, more sustainable lean business future.The lean enterprise assessment process is as figure 2 indicate.

Fig. 2. The Lean Enterprise Assessment Process

The lean enterprise assessment apply 20 Rapid Plant Audit (RPA) Yes/No questions [4] by 11 categories as figure 3 to find the strengths and weakness of organization, the detailed content as following:

Fig. 3. The RPA Assessment Questionnaire

1. Customer Satisfaction

• Are visitors welcomed and given information about plant layout, workforce, customers, and products?

• Are ratings for customer satisfaction and product quality displayed?

• Would you buy the products this operation produces?

2. Safety, Environment Cleanliness, and Order

• Is the facility safe, clean, orderly, and well lit? Is the air quality good and noise levels low?

• Does everything have its own place, and is everything stored in its place?

3. Visual Management System

• Are ratings for customer satisfaction and product quality displayed?

• Does a visual labeling system identify and locate inventory, tools, processes, and flow?

• Are up-to-date operational goals and performance measures for those goals prominently posted?

• Can the current state of the operation be viewed from a central control room, on a status board, or on a LCD screen?

4. Scheduling System

• Are production lines scheduled off a single pacing process with appropriate inventory levels at each stage?

5. Use of Space, Movement of Materials, and Product Line Flow

• Are production materials brought to and stored at line side rather than in separate inventory storage areas?

• Is material moved only once as short a distance as possible and in appropriate containers?

• Is the plant laid out in continuous product flow lines rather than in “shops”?

6. Levels of Inventory and Work in Process

• Are production materials brought to and stored at line side rather than in separate inventory storage areas?

• Are production lines scheduled off a single pacing process with appropriate inventory levels at each stage?

7. Teamwork and Motivation

• Are up-to-date operational goals and performance measures for those goals prominently posted?

• Are updated charts on productivity, quality, safety, and problem solving visible for all teams?

• Are work teams trained, empowered, and involved in problem solving and ongoing improvements?

• Do employees appear committed to continuous improvement?

8. Condition and Maintenance of Equipment and Tools

• Is a timetable posted for equipment preventive maintenance and continuous improvement of tools and processes?

9. Management of Complexity and Variability

• Are work instructions and product quality specifications visible at all work areas?

• Is there an effective project management process, with cost and timing goals, for new product start-ups?

10. Supply Chain Integration

• Is a supplier certification process-with measures for quality, delivery, and cost performance — displayed?

11. Commitment to Quality

• Do employees appear committed to continuous improvement?

• Is there an effective project management process, with cost and timing goals, for new product start-ups?

• Have key product characteristics been identified and fail-safe methods used to forestall propagation of defects?

The result of the assessment is identification as strengths and weaknesses. Categories with low ratings are having the potential for improvement, they should be a subject of immediate action to provide the leanness for continuous improvement.

This lean enterprise assessment process could be an effective assessment tool for corporate to execute operational excellence health check every 6 months, the lean enterprise assessment result can help company to find continuous improvements opportunities for enforcing enterprise performance and corporate social responsibility.

Reference:

1. Lean Enterprise Institute. What is lean. https://www.lean.org/WhatsLean/

2. Lean Enterprise Institute. Michael Ballée. https://www.lean.org/balle/

3. Mary Poppendieck,Tom Poppendieck.2003. Lean Software Development: An Agile Toolkit. Addison-Wesley Professional. ISBN 978–0–321–15078–3

4. Goodson, R.E. (2002) Read a plant: fast. Harvard Business Review, May, pp. 105–113