Business Center

Informational 2: What is Lean?

January 15, 2013; Updated: October 6, 2014

Hayley Kinney, CDOT Process Improvement Intern from the University of Colorado at Boulder;  and
Kimberly Richards, CDOT Process Improvement Intern from the Metropolitan State University of Denver

"Everyone, Every day, Improving Every Process and Every Product, for Every Customer"

At the Colorado Department of Transportation we use Lean to help us deliver excellent services and programs to our citizens through the improvement of our operations. Everyone, every day is involved in enhancing the services and programs provided to our fellow citizens. At CDOT, we use Lean and our existing resources to create more value in the work we do on a daily basis by sure our processes are effective and impactful.

Lean is a business management approach that focuses on creating better products and services, improving operations, and developing people to deliver customer value and create prosperity, while consuming the fewest possible resources. Lean principles and tools are used to eliminate wasteful activities that do not add value to the customer so that a process does more with less. Lean principles, methods, and tools encourage employee creativity, innovation, and problem-solving. Benefits from this method include lower costs and improvements to productivity, quality, and value.

1. The Two Pillars and Five Principles of Lean

The two Pillars of Lean are: Continuous Improvement and Respect for People:

Continuous improvement is embodied in this phrase: “Challenge and improve everything”. The true value of continuous improvement is in creating an atmosphere of continual learning and an environment that not only accepts, but actually embraces change.

Respect for People – Respect for people is necessary for an effective, high-performing organization.  The term “people” means employees, suppliers, partners, and customers. And, not just the end customer; customer includes the next person in the process. That leads to teamwork. Adopting this pillar means that we need to keep analyzing what we do, in order to see how we can improve on it, so that we can provide better value to our customers. That nurtures our ability to identify problems, which in turn will lead to continuous improvement.

The Five Principles of Lean are:

Value is determined by the customer and answers three questions:

  1. Is the customer willing to pay for the product or service?
  2. Does the activity transform the good or service?
  3. Is it done for the first time?

If the answers to these three questions are yes, then the customer considers the activity to be of value.

Value Stream is the process (steps or sequence) a product or service goes through to bring to delivery to the customer. Value streams are created based on what a customer values. It allows a business to see from the perspective of the customer to help them identify the optimal process of delivering a good or service.

Flow is a concept used to eliminate delays in a process so that goods or services can move smoothly from one step to the next. Flow helps reduce the amount of blockages from unnecessary steps in a process.

Pull seeks to eliminate the waste of overproduction by adopting the practice of responding to customer demand rather than anticipating it.

Strive for Perfection is a continuing goal for processes that are improved using the Lean methodology. The Lean enterprise focuses on pursing excellence, a commitment to quality, and total employee involvement. Lean processes should strive for zero defects and 100% customer satisfaction.

2. The Eight Types of Wasteful Activities

The eight types of waste for the mnemonic “WORMPITT”:

Waiting - idle time between operations or events;

Overproduction - producing too much too soon;

Rework - any change or repair made to a product or service after it is finished;

Motion - unnecessary movement of people or machines that does not add value and creates waiting;

Over-Processing - the excessive and unrequired refinement of a good or service, or the over-processing of information;

Inventory - an excess supply of product that contributes negatively to quality issues;

Intellect - a failure to utilize the time and talents of people; and

Transportation - unnecessary movement or conveyance of the product.

These eight items are considered to be non-value add because they are not valued by the customer.

3. Common Misperceptions About Lean

There are some common misperceptions about Lean; the table below addresses some of those.

Issue

Misunderstandings about Lean

The Facts about Lean

Lean vs. Six Sigma

Misunderstanding: “Lean just focuses on waste reduction and speed; Six Sigma focuses on quality and variation reduction.”

Lean is a holistic performance improvement methodology; quality is at the core.  Improvements based on Lean tend to emphasize reduction in elapsed time, which in turn forces quality problems to the surface for resolution.

Misunderstanding: “Lean is just qualitative; Six Sigma is quantitative (data driven)”

Lean is heavily based on fact-based decision-making, but aims to avoid the common trap of “analysis paralysis”.  (Lean has a “bias for action”, followed by iterative improvement cycles.)

Measurement

Misunderstanding: “Lean does not rely on statistical tools.”

Lean relies on using whatever you need to use to properly solve the problem at hand. This can, and often does, include statistical tools.

Misunderstanding: “Lean does not rely on precise measurement.”

Lean honors accuracy over precision when precision is not necessary to make a decision.  (Lean has a “bias for action”, followed by iterative improvement cycles.)

Purpose of Lean

Misunderstanding: “Lean is a just method to improve processes.”

Lean is an overarching business management approach that includes improving the performance of processes.

Misunderstanding: “Lean is just a process improvement tool.”

Lean helps us with process improvement because it is, fundamentally, an overarching business management approach.

What Lean “looks” like

Misunderstanding: “Lean is based on “Events” (a series of mapping and rapid improvement activities).”

Lean organizations have a strong culture of daily improvement, and use traditional projects for complex improvement; and, also use “events” on a selected basis for making targeted rapid improvements on larger, more-complex processes.

*content derived from “Leading Improvement: The Skills You Need,” a Karen Martin webinar.  http://www.ksmartin.com/webinars/

 

4. A Very Brief History of the Evolution of Lean

1900s: Lean practices begin to appear with the advent of the Ford production line that streamlined the manufacturing process. It allowed for high production rates and low cost but lacked quality control.

1950s: Taiichi Ohno, a Japanese businessman, observed various effective processes in the United States, which he adapted to form the Toyota Production System (TPS). This included his observations of:

1) the Indianapolis 500 race, where he observed “rapid changeovers” (pit stops) for racecars that lasted less than 60 seconds;

2) the Ford River Rouge Plant - a vertically integrated manufacturing plant; and

3) an American supermarket, where Mr. Ohno observed the concept of response to demand.

1988: John Krafcik, a graduate student at the Massachusetts Institute of Technology (MIT), coins the term “Lean” in his article entitled “Triumph of the Lean Production System.” This article is based on Mr. Krafcik’s experiences with the Toyota Production System (TPS). Mr. Krafcik later became CEO of Hyundai USA.

1993 to present: The idea of the “Lean Enterprise” has expanded to be applied not only to manufacturing processes but to transactional processes as well, including the processes of governmental organizations.

2011 to present: CDOT begins to employ the principles and practices of Lean to create better products and services, improve operations, and develop people to deliver enhanced customer value and create prosperity, while consuming the fewest possible resources. Please refer the Quick Links for more details about Lean.

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