Firm Theory Kim Valbum RUC MEA

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Firm Theory Kim Valbum RUC - MEA

• Lean Management

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What is lean?

• Lean is a term for a management concept that
  optimizes industrial production
• Lean are the principles that Toyota has developed
  for more than 50 years of car manufacturing
• Many of the principles from lean can be adjusted
  and transfered from industry to administration
  and service

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Why lean?
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Lean examples

• A pension administration
• After 12 months of intensive effort
• Number of case works in progress reduced by 60
• Number of handled case works increased by 30
  with the same resources and without overtime
• Time of case works reduced from 150 days to in
  between 5 to 15 days

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Lean - examples

• A Trade Union
• After 8 months of hard effort productivity was
  raised by more than 50 - without raising work
  speed
• Waiting time for incoming telephone-calls was
  reduced by 65
• Waiting time for unannounced members was reduced
  from 25 to 5 minutes.

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Lean - examples

• A public administration (building dep.)
• In 6 months a new main process for simple cases
  was established, which reduced time of case work
  from 21 to 2 days(!)
• And increase in the number of simple cases
  handled by more than 40 , within the same pool
  of resources.

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Its a matter of management included works
management!
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The story of Toyota Motor Co.

• 1949 Toyota faced a serious crisis -gt Toyota
  Production system
• Japanese Car Industry raised its world market
  share from 1 in 1955 to 30 in the 1980ies
• Jim Womack Daniel Jones present th book The
  Machine That Changed the World The Story of
  Lean Production.
• Productivity and quailty was outstanding and the
  mass production demanded less resources for the
  same production as in USA.

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What is Lean production?

• Lowering costs continuously
• No waste
• No defects/failures/errors
• Minimized turnaround time
• No unnecessary stocks
• Minimized use of space
• Maximum exploitation of capacity
• Unlimited flexibility
• High job satisfaction
• High costumer satisfaction

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How to get to Lean Production

• Understand what creates customer value and to
  spot the value chain on how the raw materiel is
  added value to the point where the customer need
  is met
• Identify the activities in the value chains that
  do not create customer value i.e. waste
• Make flow in production as few stops and change
  of responsibility as possible

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How to get to Lean Production

• 4. Make production pull managed so it always is
  the customer who decides what to be produced and
  when
• 5. Bring about the competences to carry through
  continuous improvements
• 6. Place responsibility in the organisation to
  ensure outlook - from the perception of
  production - to the delivery of a product

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Loop-learning

• Chris Argyris
• Wise fail fools continue!

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House of lean is based on a solid foundation
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1. Understand the customers

• The customer expects the same standard and
  quality every time!
• Organize for the proces more than the function
  organize for customer
• As less change in responsibility as possible
  doctor follows the patient
• Interdisciplinarity and not only specialise in
  function
• Managers as owners of the process

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2. Take over of control

• Measure of
• Incoming tasks
• Normal time for every task
• Outflow of tasks
• Current tasks in department
• Time of handling
• Ressource consumption in department
• Productivity
• Exploitation of capacity
• Quality

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3. Create visibility

• Gather activities and ensure visual flow (i.e.
  open offices)
• Establish uniform and process oriented paper flow
  (i.e. paper in open shelves)
• Use physical means to support visualisation on
  shelves, diagrammes, signs etc.
• Gather close parts of the process physical as
  close as possibel. Make sure the deliverer is
  as close to the customer for the sake of
  coordination

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4. Trust standards

• Clear-up to activate employees and as at start
  for standard generel improvement
• Map the target group for standards and determine
  ideal format with them
• Make new standards. Make checklists for things to
  do when. Keep agreements
• Communicate standards so every one has a chance
  to relate and be informed
• Make follow-up routines

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5. Make things clear on responsibility

• Management ensure structure, organisation,
  employees, skills etc.
• Create teams of 5-15 employees to
• Plan daily work
• Getting through daily work
• Follow up on daily work
• Activities of emprovement
• Development of competences

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6. Make flow

• Single piece flow finish every single case
  independent to other cases
• Workflow IT-system to support the
  interdisciplinary processes
• Things done in the right order
• Overview on how many tasks in the system

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7. Prevent mistakes

• Errare humanum est!
• Quantify the extent of failures
• Prevent eliminate failures by
• Employees register every mistake by kind
• Find out where the failure is spotted and has its
  origin
• Describe the acitivities in steps of process
• Set up chains of problems till the reasons have
  been sought out
• Make a list of possible ways to eliminate
• Make agreement of the best solution and make a
  standard

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8. Continuous improvement

• Kai road. Zen good.
• Management, structure, tools, training
• Kaizen-groups must be trained and establish
  knowlege to lean-tools like
• Developping of standards
• Process analysis mapping of relevant processes
  and identification of performance target
• Waste analysis systematic methods to identify
  and eliminate waste in processes
• Tools of problem-solving brainstorming,
  reason-effect-diagrammes

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9. Maximize customer value - I

• Excellent customer focus is about
• We service customers before anything
• We exist to create value to our customers
• We supply friendly, unique customer-service and
  excellent value every time
• We work with passion, enthusiasm and engagement
  to the customers
• We deliver hard work productivity but it is
  still fun
• We eliminate waste everywhere
• We pursue still higher objectives

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9. Maximize customer value - II

• Who are the customers?
• What do they expect from us?
• Make a long-list of possible customers
• Arrange similar customers in segments
• Describe specifically what we deliver today
• Estimate the activity for every customer
• Estimate time consumption on customer groups
• How is the performance related to customers?
• Carry through a quality assesment in the
  department to ensure customer supply quality

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Get on with it!

• The development process can have the extension of
  2-3 years
• Process of strategy determination of customer
  segments, main processes and generel organisation
  (6 months)
• Start of lean with focus on basic elements
  development of productivity in steps (10 months)
• Running improvements (6 months)
• Errors and failures halving of level (10
  months)
• Continuously improvements

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Bon mots before start-up

• Believe the vision of lean and show personal
  engagement
• Talk with the employees about their worryings
• Use the good example to create motivation
• Prepare yourself to undego changes as a manager
• Visibility make things very simple
• Lean fills you with enthusiasm because it works
  in practice!