Purpose of the Lean Operating Model
The purpose of the Lean Operating Model is to develop a way of working throughout the enterprise to satisfy the customer, enable growth by eliminating waste and improving margin.
Organisations embrace Lean for the following reasons
- Lean is a bottom up approach of engagement. It looks to involve every colleague in waste elimination to drive value and margin.
- It is inclusive as a philosophy towards improvement where everyday ideas are valued for their incremental contribution to the margin.
- Lean follows certain principles that have been distilled over 100 years into an operating system that thrives across all industries.
Definition of the Lean Operating Model
The Lean Operating Model is a set of defined principles used to determine the way of working for an organisation to minimise waste and build customer value. It can be summarised in 6 key principles:
- Just In Time – velocity of product to conserve cash, improve delivery, control production and improve process lead time
- Stability – build excess capacity for strategic use and standardise for improvement
- Build In Quality – zero defects forward, protect the customer, protect the brand
- Continuous Improvement – everyone, everyday providing year on year improvement
- Policy Deployment – drive strategy into execution
- Future Design – design cost out of operations
Building the Lean Operating Model takes time as it is a cultural transformation that requires leadership to play a vital role in embedding Lean as a way of working (see Leadership Principles).
The Lean Operating Model is shown as a house in order to demonstrate the interdependence of the principles involved.
Stability is there to provide a platform for improvement. Just In Time cannot function as designed if operations suffer from unforeseen downtime or ill defined processes upon which meaningful improvements can be made. Without a stable platform, the house will collapse.
Stability does not mean that processes are set and never change, quite the opposite. Stability is setting the baseline with good standards in operations from which improvements can then be made and, in the process of improvement, generating more capacity that can be used by the organisation as a strategic weapon in the market place.
Implementation of the Lean Model
There is no prescribed way to implement Lean. It does depend on the circumstances a company finds itself in and the urgency it may face from customers or the balance sheet. Invariably, organisations start with a Value Stream Map which helps to understand where the current issues are in the process and what the future could look like. However, for the Value Stream Map (VSM) to succeed, there is a need for a roadmap of implementation, otherwise the VSM exercise can become hostage to local politics or current beliefs in leadership.
Some organisations choose to drive the Lean Operating Model with Just In Time, forcing value streams to address the issues by exposing them with a focus on inventory reduction. Others choose to focus on Stability before building the pillars of Just In Time and Build In Quality. It is a choice made based on the capability and strength of leadership, agility of systems, and the voice of the customer.
To understand GENEO’s approach contact us.
Additional context on Lean and Six Sigma
Lean is the operating model as defined by Toyota. Lean, first known as TPS (Toyota Production System), emerged as the outstanding operating system developed over several decades by the Japanese automotive manufacturer. It is an operating model that has flourished across different industries made famous through the publication of the Machine That Changed The World in 1990 by Womack, Roos and Jones. At its heart it focusses on the elimination of waste, driving flow and building in quality which are simple statements yet hard to do for most organisations. However, this model saw Toyota rise organically from the bottom ranks of the car making industry to being in the top three at the turn of this century.
From a quality perspective Toyota is a six sigma company and yet it does not practice Six Sigma as a programme. Toyota recognises the importance of defect free processes, and the use of statistics, but these form a part of their quality system of Build In Quality.
Six Sigma emerged in the 1980s with Motorola’s goal to be a six sigma enterprise and gained popularity on the back of GE’s success. Some organisations abandoned Lean for Six Sigma or merged them together to form Lean Sigma or Lean Six Sigma in the hope to gain a double hit in improvements or simply to not be seen to be jettisoning one corporate initiative for another.
From GENEO’s perspective, we choose not to merge. There are conflicting ideologies in the practice of Six Sigma and the Lean Operating Model. There are fundamental aspects to both systems which work best for the organisation when kept separate. When merged leadership adds a layer of confusion to the way in which problems are solved and who solves them, the art of continuous improvement and the emphasis the organisation must place on which principle of the operating model trumps another.
This does not mean that Six Sigma is bad or does not fit in the world of continuous improvement. It clearly does. It has a place in improving quality in the eyes of the customer, however, that place, in GENEO’s view is as a tool to be called upon in order to achieve quality rather than as a programme of culture transformation.
GENEO treats Six Sigma, therefore, as a sub-system or tool in the Lean Operating Model.
Tools, Systems and Principles
Lean, as defined above is an operating model made from key principles which are interdependent. It requires a long term view by the organisation and should be seen as a ‘thinking way’ for all employees. At the tactical level we can see kanban cards, visual footprints, Standardised Work Charts and many other tools, but each of them form part of a system and those systems are defined to support the principles of the Lean Operating Model. In other words, approaching Lean from a tool based perspective leads to ruin pretty quickly. This has to be leadership led with the principles constantly shaping the organisation’s ideas on how the systems and tools should work.
If we think of an organisation as a triangle it will seem natural for it to sit on its base, static and rather set in its ways. Command and control cultures can be represented in this form, directive structures that tell the organisation what to do with little room for innovation or accountability. Lean looks to tip the triangle upside down, to put it on its point, where the frontline staff are considered customers of our services as leaders to augment the value add and delight our customers. This organisation is forever learning, constantly improving, with leaders coaching the thinking way.
These Operational Excellence pages talk about fundamental lean principles and associated tools. Understanding how to apply these principles and tools to the individual circumstance of discrete organisations is where expertise and experience is paramount. The GENEO team has many decades of experience in doing exactly this.