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Lean enterprise is a practice focused on value creation for the end customer with minimal waste and processes. [1] The term has historically been associated with lean manufacturing and Six Sigma (or Lean Six Sigma) due to lean principles being popularized by Toyota in the automobile manufacturing industry and subsequently the electronics and internet software industries. The three key core competencies of a lean enterprise are scaled agile framework, efficient processes, and customer focus. [2]
Principles for lean enterprise derive from lean manufacturing and Six Sigma principles:
There are five principles, originating from lean manufacturing, outlined by James Womack and Daniel Jones [3] [4]
There are key lean enterprise principles originating from Lean Six Sigma principles. These principles focus on eliminating 8 varieties of waste (Muda) and form the acronym Downtime: [5]
These 8 varieties of waste are derivative from the original 7 wastes as defined in the Toyota Production System (TPS). They are:
The 8th waste of non-utilized talent was not recognized until post-Americanization of the Toyota Production System (TPS).
The lean startup principles, developed in 2008 from lean manufacturing, also now contribute to our understanding of lean enterprise:
Henry Ford developed a process called assembly line production. [6] This is a manufacturing process in which parts are added as the assembly moves from work station to work station where parts are added in sequence until final assembly is produced. [7]
Alfred Sloan of General Motors further developed the concept of assembly line production by building a process called mass production that allowed scale and variety. This process enabled large amounts of standardized products to run through assembly lines while still being able to produce more variety and compete against Ford's single offering. [8]
Kiichiro Toyoda studied the Ford production system and adapted the process in order to have smaller production quantities. He built a production system called Just-in-Time Manufacturing for Toyota along with Taiichi Ohno. It's worth noting too that kaizen, the process of continuous improvement, was developed in the 1950s by Eiji Toyoda along with the Toyota Production System (TPS). [9]
New innovations in lean enterprise moved away from machine technology to electronic technology. [10]
Another development was management techniques from Motorola commonly referred to as Six Sigma. [11] This management technique was built off of mass production principles with more focus on minimizing variability. Applying Six Sigma principles led to reduced cycle time, reduced pollution, reduced costs, increased customer satisfaction, and increased profits.
New innovations in lean enterprise moved away from electronic manufacturing to internet and software technology. Before, during, and after the dot-com bubble, internet and software enterprises originally did not place emphasis on lean enterprise principles for efficient usage and allocation of capital and labor due to accessible funds from venture capital and capital markets. The idea of "build it and they will come" became common practice as a result. [12]
After the dot-com bubble, inspired by the Agile Manifesto, internet and software companies began operating under agile software development practices such as Extreme programming. [13] Along with the agile software movement, companies (especially startups) applied both lean enterprise and agile software principles together in order to develop new products or even new companies more efficiently and based on validated customer demand. Very early practices of lean enterprise and agile software principles was commonly referred to as lean startup. [14]
After 2010, more and more enterprises are adopting this new branch of lean enterprise (lean startup) since it provides principles and methodologies for non-internet enterprises to enter in new markets or offer goods and services in new form factors with less time, labor, and capital. For internet and software enterprises (by tradition), the Lean startup variant of lean enterprise enabled them to remain competitive with new technologies and services that are rapidly coming out to market without exclusively resorting to mergers and acquisitions, and being able to retain internal innovation ecosystem competency. [15] [16] [17]
Lean manufacturing is a production method aimed primarily at reducing times within the production system as well as response times from suppliers and to customers. It is closely related to another concept called just-in-time manufacturing. Just-in-time manufacturing tries to match production to demand by only supplying goods which have been ordered and focuses on efficiency, productivity and reduction of "wastes" for the producer and supplier of goods. Lean manufacturing adopts the just-in-time approach and additionally focuses on reducing cycle, flow and throughput times by further eliminating activities which do not add any value for the customer. Lean manufacturing also involves people who work outside of the manufacturing process, such as in marketing and customer service.
Kanban is a scheduling system for lean manufacturing. Taiichi Ohno, an industrial engineer at Toyota, developed kanban to improve manufacturing efficiency. The system takes its name from the cards that track production within a factory. Kanban is also known as the Toyota nameplate system in the automotive industry.
The Toyota Production System (TPS) is an integrated socio-technical system, developed by Toyota, that comprises its management philosophy and practices. The TPS is a management system that organizes manufacturing and logistics for the automobile manufacturer, including interaction with suppliers and customers. The system is a major precursor of the more generic "lean manufacturing". Taiichi Ohno and Eiji Toyoda, Japanese industrial engineers, developed the system between 1948 and 1975.
Lean software development is a translation of lean manufacturing principles and practices to the software development domain. Adapted from the Toyota Production System, it is emerging with the support of a pro-lean subculture within the agile community. Lean offers a solid conceptual framework, values and principles, as well as good practices, derived from experience, that support agile organizations.
Operations management is an area of management concerned with designing and controlling the process of production and redesigning business operations in the production of goods or services. It involves the responsibility of ensuring that business operations are efficient in terms of using as few resources as needed and effective in meeting customer requirements.
Lean thinking is a management framework made up of a philosophy, practices and principles which aim to help practitioners improve efficiency and the quality of work. Lean thinking encourages whole organisation participation. The goal is to organise human activities to deliver more benefits to society and value to individuals while eliminating waste.
Muda is a Japanese word meaning "futility; uselessness; wastefulness", and is a key concept in lean process thinking, like the Toyota Production System (TPS) as one of the three types of deviation from optimal allocation of resources. Waste in this context refers to the wasting of time or resources rather than wasteful by-products and should not be confused with Waste reduction.
Genba is a Japanese term meaning "the actual place". Japanese detectives call the crime scene genba, and Japanese TV reporters may refer to themselves as reporting from genba. In business, genba refers to the place where value is created; in manufacturing the genba is the factory floor. It can be any "site" such as a construction site, sales floor or where the service provider interacts directly with the customer.
Ohno Taiichi was a Japanese industrial engineer and businessman. He is considered to be the father of the Toyota Production System, which inspired Lean Manufacturing in the U.S. He devised the seven wastes as part of this system. He wrote several books about the system, including Toyota Production System: Beyond Large-Scale Production.
The concept of Operational Excellence was first introduced in the early 1970s by Dr. Joseph M. Juran while teaching Japanese business leaders how to improve quality. It was formalized in the United States in the 1980s in response to "the crisis" among large legacy companies whose market share was shrinking due to quality goods imported from Japan.
Takt time, or simply takt, is a manufacturing term to describe the required product assembly duration that is needed to match the demand. Often confused with cycle time, takt time is a tool used to design work and it measures the average time interval between the start of production of one unit and the start of production of the next unit when items are produced sequentially. For calculations, it is the time to produce parts divided by the number of parts demanded in that time interval. The takt time is based on customer demand; if a process or a production line are unable to produce at takt time, either demand leveling, additional resources, or process re-engineering is needed to ensure on-time delivery.
Value-stream mapping, also known as "material- and information-flow mapping", is a lean-management method for analyzing the current state and designing a future state for the series of events that take a product or service from the beginning of the specific process until it reaches the customer. A value stream map is a visual tool that displays all critical steps in a specific process and easily quantifies the time and volume taken at each stage. Value stream maps show the flow of both materials and information as they progress through the process.
A lean laboratory is one which is focused on processes, procedures, and infrastructure that deliver results in the most efficient way in terms of cost, speed, or both. Lean laboratory is a management and organization process derived from the concept of lean manufacturing and the Toyota Production System (TPS). The goal of a lean laboratory is to reduce resource usage and costs while improving productivity, staff morale, and laboratory-driven outcomes.
Lean Six Sigma is a method that uses a collaborative team effort to improve performance by systematically removing waste and reducing variation. It combines lean manufacturing/lean enterprise and Six Sigma to eliminate the eight kinds of waste (muda).
Lean dynamics is a business management practice that emphasizes the same primary outcome as lean manufacturing or lean production of eliminating wasteful expenditure of resources. However, it is distinguished by its different focus of creating a structure for accommodating the dynamic business conditions that cause these wastes to accumulate in the first place.
Lean IT is the extension of lean manufacturing and lean services principles to the development and management of information technology (IT) products and services. Its central concern, applied in the context of IT, is the elimination of waste, where waste is work that adds no value to a product or service.
Lean project management is the application of lean concepts such as lean construction, lean manufacturing and lean thinking to project management.
Lean startup is a methodology for developing businesses and products that aims to shorten product development cycles and rapidly discover if a proposed business model is viable; this is achieved by adopting a combination of business-hypothesis-driven experimentation, iterative product releases, and validated learning. Lean startup emphasizes customer feedback over intuition and flexibility over planning. This methodology enables recovery from failures more often than traditional ways of product development.
Lean integration is a management system that emphasizes creating value for customers, continuous improvement, and eliminating waste as a sustainable data integration and system integration practice. Lean integration has parallels with other lean disciplines such as lean manufacturing, lean IT, and lean software development. It is a specialized collection of tools and techniques that address the unique challenges associated with seamlessly combining information and processes from systems that were independently developed, are based on incompatible data models, and remain independently managed, to achieve a cohesive holistic operation.
Design for lean manufacturing is a process for applying lean concepts to the design phase of a system, such as a complex product or process. The term describes methods of design in lean manufacturing companies as part of the study of Japanese industry by the Massachusetts Institute of Technology. At the time of the study, the Japanese automakers were outperforming the American counterparts in speed, resources used in design, and design quality. Conventional mass-production design focuses primarily on product functions and manufacturing costs; however, design for lean manufacturing systematically widens the design equation to include all factors that will determine a product's success across its entire value stream and life-cycle. One goal is to reduce waste and maximize value, and other goals include improving the quality of the design and the reducing the time to achieve the final solution. The method has been used in architecture, healthcare, product development, processes design, information technology systems, and even to create lean business models. It relies on the definition and optimization of values coupled with the prevention of wastes before they enter the system. Design for lean manufacturing is system design.