Ttulo:

Lean thinking redefines O&M practices ,

De: Motley, William T., Power, 00325929, Mar 2004, Vol. 148, Fascculo 2 Base de datos: Business Source Premier Seccin: QUALITY MANAGEMENT

Lean thinking redefines O & M practices

Remember that last new quality control program that promised to solve all your problems? Six months later you may not even remember the consultant's name, much less have implemented any of his suggestions. Lean thinking, on the other hand, is a philosophy that can enable any enterprise--including a power plant--to run at maximum efficiency and produce top-quality products at the lowest cost. "Lean thinking" is now common place in all spheres of business, from making electronic components to the design and manufacture of the F-16. Despite its roots in manufacturing, lean thinking can be applied to any service, product, process, or organization. Lean initiatives can be found in service operations, governmental agencies, the military services, and-increasingly--in the O&M departments of power plants.

Toyota started it all

Lean enterprises have goals and strategies that are clear, consistent, and well-understood across the organization. At the corporate level, lean enterprises are characterized by a focus on customers' needs and requirements. Their objective is to provide customers with a product or service with the highest quality, lowest cost, and shortest time to market. Dr. James Womack and his colleagues at the Massachusetts Institute of Technology popularized the concept (see "Defining the term") in The Machine that Changed the World (Womack, Jones, and Roos). First published in 1990, the book--written for the International Motor Vehicle Program (IMVP)--outlined new approaches developed by Toyota Motor Corp. to manage its customer relations, product development, manufacturing operations, and supply chains. Womack used the word "lean" to characterize an operation, process, or enterprise that continues to do more with less.

What was significant about Toyota? IMVP researchers found that the firm was able to design and produce cars in approximately half the time, with two-thirds the work hours, and with one-fifth the defects of its competitors. Those advantages allowed Toyota to increase its market share in times of recession. Toyota developed a production system that balanced the flexibility of craft production with mass production's economies of scale--and it did well. (For more details, see Lean Thinking, 2nd ed. (Womack and Jones, Free Press, N.Y., 2003); The Evolution of a Manufacturing System at Toyota (Fujimoto, Oxford University Press, N.Y., 1999); and Toyota Production System, 2nd ed. (Monden, Industrial Engineering and Management Press, Norcross, Ga., 1993). Toyota, the architect of lean thinking, still must be doing something right, because it captured 10% of global motor vehicle sales in 2000 and is aiming for a 15% share and a No. I position before 2010. For the fiscal year ended March 31, 2003, Toyota reported $11.3 billion in operating income--the most ever reported by a car company and more than that of General Motors, Ford, and Daimler-Chrysler combined.

Tailored to your needs

Different organizations and consultants have begun to tailor particular aspects of the Toyota Production System (TPS) for Western companies. Such adaptations are necessary because the original concepts either prove difficult to implement or run counter to the principles of Western organizational cultures. A lean system has many fundamental aspects that need to be preserved; otherwise the implementation will probably fail. Halfhearted attempts to adopt lean concepts as the program de jour are doomed from the start. Lean is a way of thinking, from the boardroom to the shop floor (see "Some key characteristics of lean thinking"). It is important to remember that Toyota did not develop its techniques and philosophy in a void. Eiji Toyoda and Taiichi Ohno were the developers of the TPS, although both men have repeatedly stated that Henry Ford is the spiritual father of their system. Many Japanese managers studied Henry Ford's ideas and methods in the areas of operations management and organization, both before and after World War II. Toyota was forced to develop an alternative to mass production when post-World War II Japan was experiencing hyperinflation. In an effort to get the economy under control, the government severely curtailed the availability of investment capital in the economy. Toyota was financially unable to copy the Detroit model of mass production, with its heavy emphasis on inflexible

automation, by buying similar equipment. In roughly the same period, the government also decided that, in order to move toward a free market economy, it would no longer underwrite the business operations of Japan's automobile and truck manufacturers. Manufacturers were forced to compete on their own merits, forcing Toyota to carefully reexamine the conventional thinking of mass production. Norm Bodek, a lean systems consultant and author, wrote in his introduction to the Productivity Press 1988 reprint of Henry Ford's 1926 book, Today and Tomorrow, "I was first introduced to the concepts of just-in-time (JIT) and the Toyota Production System in 1980. Subsequently I had the opportunity to witness its actual application at Toyota on one of our numerous Japanese study missions. There I met Mr. Taiichi Ohno, the system's creator. When bombarded with questions from our group on what inspired his thinking, he just laughed and said he leaned it all from Henry Ford's book."

Breaking paradigms
Toyota hasn't been the only company forced to create new business paradigms in response to external threats. However, history reveals that very few organizations have adopted lean thinking without facing seemingly overwhelming competition that threatened their very existence. Naturally, the more profitable and successful an organization is, the less support there will be for lean thinking. As one manager of a very profitable, but very inefficient, auto plant once told the author, "We are only as lean as we need to be." Psychological complacency is the greatest barrier to lean implementation. Another obstacle to the adoption of lean thinking is the considerable time required to understand and implement the concept and train workers how to use it (see "The five steps of lean implementation"). Toyota has been perfecting its production system for more than 50 years. Many organizations do see dramatic improvements in focused areas within a short time using lean techniques, such as kaizen (continuous, incremental improvement) activities. However, the full benefits of a lean implementation will most likely take five years or more of serious work. Unfortunately, this is sometimes too long for many managers who have their eye on the quarterly bottom line.

Define your terms

How do you and your organization define value? An explicit understanding of value is necessary to becoming a lean thinker. Perhaps value to you is "relative worth, utility, or importance" or maybe "degree of importance." A more useful definition of value is this one: The satisfaction of customer requirements at the lowest possible cost of acquisition, ownership, and use. Value may also be defined in terms of: Quality. Do you meet the stated and implied requirements of your internal and external customers, including regulatory agencies? Is your product or service inherently safe and environmentally sustainable? Availability. Is your service or product usable, functional, and on-line when the customer so desires? Do you have measures of availability? Affordability. Is the production cost of your product or service the lowest in the competitive market place? If it isn't, how do differentiate your product or service from the competition? What would the cost of your product or service be if it were completely waste-free? Now expand the definition of lean, considering what value means in your organization. One well-accepted definition of lean is "a way of thinking that focuses on maximizing customer value while eliminating all waste." At the highest level, lean thinking is about creating value while consuming fewer resources. What is the particular worth, benefit, or reward your customers find from using your product or service? Lean organizations explicitly quantify the value they provide to their customers, both internal and external.

Value stream analysis

Do you have a business or process flow model of your organization or facility? Do you know the actual steps and sequences that are required from customer order to delivery? Do you know the actual durations and costs associated with each process step? Without a model, you cannot answer those questions. These interrelated steps or process flow are called a value chain or value stream. The first step in any lean initiative is the construction of this chain or stream of processes and activities. The primary value chain consists of suppliers, inbound

logistics, internal operations, outbound logistics, marketing and sales, service, and your customer. You must perform your analysis with a combination of a total systems perspective with the application of the knowledge of local processes (see figure). How many of the process steps increase quality, increase availability--or needlessly increase cost? When problems occur, are they readily selfevident? Can you identify activities that have no value? Value stream improvement begins with the industrial engineering principles of simplifying, eliminating, and combining process steps.

Eliminating waste
Waste is any action or process step that consumes resources and does not add value for the customer. If the customer is not willing to pay more for the action or step, it is considered waste. This is broader and deeper than the generally accepted definition of waste and is a key part of lean as a way of thinking. According to Kiyoshi Suzaki of Toyota, there are seven fundamental wastes (muda, in Japanese). To summarize those wastes (which follow), the fundamental goals of a lean system are to do the right thing, at the right time, in the right place, in the right quantity, with the fewest possible resources. Producing more material than is needed, or before the customer needs it. Overproduction consumes resources that could be better used elsewhere. Producing excess product does not result in immediate payment from the customer. Organizations fall into the overproduction trap because they are slaves to the accounting idea that people and machines must always be fully utilized. Overproduction consumes resources that are sometimes not immediately captured by traditional cost accounting systems. Excess inventory. Excess inventory usually represents a just-in-case mentality that treats symptoms rather than root causes. Inventory is considered an asset by accountants and a fallback position by marketing and manufacturing managers. If customer demand suddenly increases or manufacturing problems arise, inventory is used to cover the problem. Inventory has many downsides. It must be stored, transported, and insured. It may become obsolete due to engineering changes or new technology. But worst of all, excess inventory allows people and manufacturing systems to learn to live with systemic problems rather than solve them.

Waiting. Material and personnel waiting increases lead times and adds cost without adding value. This is an obvious waste but one that is surprising ignored, usually because it requires fundamental infrastructure changes. Delays inside and external to the supply chain make your product more expensive and less responsive to customer demand. Defective products. Defective products increase costs, create problems within manufacturing facilities, and create ill will with your customers. They also consume resources that could have been used to produce good products. Employee motion. Operators waste time when moving from task to task and do nothing to create value or transform raw materials into finished goods. Although workers may have to move about in order to obtain materials, tools, or information, it is generally better to bring tools, materials, and information to them. Transportation of materials and work in progress. Transportation also does not create value or transform raw materials into finished goods. And it increases the possibility of damaging a product. Overprocessing. Overprocessing includes overengineering, redundant or unneeded inspections, unnecessary layers of document review, and responding to unnecessary requirements. Overprocessing reduces employee morale and generates apathy toward organizational policies and procedures.

Lean directs supply chain

All industries continue to increase the outsourcing of their components and subsystems. Supply chain management has become a strategic factor rather than just another cost of doing business. Effective management of a supply chain cannot be done without determining suppliers' competencies and capacities. How financially stable are they? Will they be around long enough to deliver? Are they continually raising the quality and lowering the cost of their products? Once suppliers have been selected, how will their business and technical processes be managed? Systems must be in place for planning and forecasting demand. Physical distribution problems must be addressed. Information systems must be in place that allows end-to-end visibility of the entire supply chain.

All supply chains are subject to information distortion; time lags, information errors, and changes in demand can create large fluctuations within the supply chain. These sources of information distortion can place the entire supply chain out of sync with what is really required by the customer. To try to remedy this problem, lean enterprises are shortening their supply chains by using fewer, world-class suppliers and linking them with better, real-time information. A word to the wise: Beware of false economies. Numerous firms have outsourced activities only to find their costs and problems have increased due to increased management complexity, longer lead times, poorer quality, or all of the above. A lean enterprise is only as strong as its weakest supplier.

Total productive maintenance

Total productive maintenance (TPM) is a methodology for obtaining zero product defects through properly designed and maintained equipment whose goal is zero unplanned downtime. This requires that operators become intimately involved in all aspects of the equipment lifecycle, including design, selection, maintenance, and safety. Equipment maintenance is no longer solely the responsibility of the maintenance department. In addition to the basics of planned and condition-based maintenance, other forms of maintenance include these: Proactive or predictive maintenance--the use of reliability engineering and failure mode effects and analysis to prevent and evaluate equipment failures. Managing equipment maintenance databases containing equipment configurations, problem logs, and O&M histories. Focusing on total cost of ownership by developing a projected lifecycle cost for each piece of equipment from purchase, through operations and maintenance, to disposal. Lean is a way of systems thinking. Lean expands the ways we evaluate our relationship with our customers by redefining value and waste. And most importantly, lean is implemented mainly through human trust and disciplined work methods rather than through technology.

Editor's note: This article is the first in a planned series of tutorials on plant quality control philosophies, programs, and practices.

Defining the term

Lean production is aimed at the elimination of waste in every area of production, including customer relations, product design, supplier networks, and factory management. Its goal is to incorporate less human effort, less inventory, less time to develop products, and less space to become highly responsive to customer demand white producing top-quality products in the most efficient and economical manner possible.

Some key characteristics of lean thinking

Customer-focused. Customer needs and expectations "pull" enterprise activities. Knowledge-driven. Lean thinking draws upon the expertise and innovation of everyone from workers to suppliers. Stresses elimination of waste --rather than just its reduction. Creates value for ail stakeholders by placing a premium on "growing the pie," not just reducing costs. Dynamic and continuous. Lean thinking pursues systemic as well as incremental improvement through innovation.

The five steps of lean implementation

Value. Define value from the perspective of the final customer. Express value in terms of a specific product that meets the customer's needs at a specific price and at a specific time. Map. Identify the value stream, the set of all specific actions required to bring a specific product through the three critical management tasks of any business: the problem-solving task, the information management task, and the physical transformation task. Create a map of the current and future state of the value stream. Identify and categorize waste in the current state, and eliminate it. Flow. Take the remaining steps in the value stream flow. Eliminate functional barriers and develop a product-focused organization that dramatically improves lead time.

Pull. Let the customer pull products as needed, eliminating the need for a sales forecast. Perfect. There is no end to the process of reducing effort, time, space, cost, and mistakes. Return to the first step and begin the next Lean transformation, offering a product that is even closer to what the customer wants.

Learn the lean lingo

Master these terms, and you'll sound like a lean expert in no time. Autonomation: Automation with a human touch. Refers to semi-automatic processes in which the operator and machine work together. Autonomation allows man-machine separation. Also referred to as jidoka. Balanced production: All operations or cells produce at the same cycle time. In a balanced system, the cell cycle time is less than takt (see below) time. Error-proofing: Designing a potential failure or cause of failure out of a product or process. Flow manufacturing: A manufacturing methodology that pulls items from suppliers through a synchronized manufacturing process to the end product. The primary goat is faster response to customer demand. Kaizen: Japanese term for incremental improvement. A team approach to quickly tear down and rebuild a process so it functions more efficiently. Kanban: Techniques named after the Japanese word for card or communication. A stocking technique using containers, cards, and electronic signals to make production systems respond to real needs and not predictions and forecasts. Just-in-time (JIT) manufacturing: A method in which down stream operations putt required parts from upstream operations just when they are needed. Implementing JIT requires most features of lean manufacturing. Mistake-proofing: Any change to an operation that helps the operator reduce or eliminate mistakes. Muda: Anything that interrupts the flow of products and services through the value stream and out to the customer is designated muda--waste.

One-piece flow: Producing one unit at a time, as opposed to producing in large tots. Poka-Yoke: Techniques to mistake-proof a process. Six sigma: A structured process-improvement program for achieving virtually zero defects (3.4 parts per million) in manufacturing and business processes. Standard operations: Clearly defined operations and standardized steps for both workers and machines. Takt time: Takt is German for pace. Takt time defines the manufacturing line speed and the cycle times for all manufacturing operations. Takt time is computed as available work time per day divided by daily required demand (parts/day). Value stream mapping: A process to determine the value added to a product as it goes through a manufacturing process. DIAGRAM: The value chain. In a lean maintenance organization, materials are what flow. In a service organization, internal and external customer needs and information are what flow. In either case, value stream mapping is a tool to identify and remove impediments to flow. Source: William T. Motley By William T. Motley, Consultant