THE LEAN ENTERPRISE

Productivity - The Result of Speed of Service
In Lean Enterprises

Håkan Södersved, Expira AB

ABSTRACT

 

Original paper given at the World Productivity Congress, in Stockholm 1993

 

Principles of Lean Accounting

The aim is to provide a simple strategy for measuring and improving productivity of service as a function of lead time, strategic and tactical overhead and concersion costs, number of tasks (or units) in process and the input (outsourcing) costs involved. This principle conforms to Little's Law published in 1961. The lead time is dependent on the efficiency of the interactive communication and co-operation of the teams in a lean process. It is also dependent on the degree of multi-skills of the employees. It is dependent on the variability, stability and capability of the critical to quality characteristics of the business process. A team based organization gives a higher speed of service than a line management organization of the old tayloristic model.

 

Lean might be defined as a stable process state of even flow with a high proportion of added value VA in comparison to total throughput or leadtime of your process. How to catch the change process of reaching lean? Added value is the source of income for most people, but the ambition for an added value is also the source of high costs and bad competitive position because of low efficiency of setups and operational procedures, lack of training and the right skills. We must learn to constantly reduce error rates, obstacles, bad procedures, bureaucracy and eliminate bottle necks out of our organizations to improve productivity. These methods and skills are gathered into the Lean Six Sigma packages.

 

A lean process requires increased knowledge and skill in the subject matter of the process and efficient IT-tools. Increased knowledge also means statistical and predictive methods for improving processes in the long term. Knowledge is information valid for prediction of the future. Skill is a result of training and exercise. Teamwork is an effective way of balancing the level of knowledge. New knowledge should come from outside into a system.

 

Theory, Data and Method

To get a larger understanding of the importance of short lead times, we have to study the basic theory for lean unit cost of production or service. We consider the whole organization as one team due to increasing interaction between teams for speed of customer service and process results. The theory mostly used in continuous flow of mass production is based on three factors: materiel input, management and tactical overhead, products or value in conversion process and total lead time. 

 

Implications

By applying the Lean Enterprise System to all subtier levels of a Value Stream Process costs can be reduced significantly. Main factors of non-added value, costs, speed and productivity can be identified and explained. Tactical selection of appropriate Lean Six Sigma tools becomes easier. The balance of quality investments in respect to reduced lead times will be balanced. Strategies for effective teamwork on different problems will be visualized. Service organizations in community medical care, education, public service, etc will improve their economic awareness.

 

About the company

EXPIRA AB Lean Six Sigma is a private training and consultant company based in Stockholm. Main focus is on In-House Training and Consulting in Lean and Six Sigma Management and Lean Production. Supportive Leadership, Teamwork and 5S are supported. Statistical Methods by Software Tools, core Literature and Visual Training Aids are supplied at request.

 

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Håkan Södersved

President

Expira AB

Lean Six Sigma