Lean dynamics
Encyclopedia
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.
Like lean manufacturing
, lean dynamics is a variation on the theme of creating efficiencies and greater value by optimizing flow rather than by maximizing economies of scale. As such, it represents an important chapter in the broader discussion of Taylorism, Fordisim, Alfred Sloan's standard volume methodology, Peter Drucker's philosophy on the "theory of the business" and Genichi Taguchi's analysis of loss. Its general philosophy has grown in popularity over recent years, in large part because of the increasingly challenging circumstances faced by the global business world (particularly evident during the 2008-2009 worldwide economic downturn.)
This need to create greater efficiencies while competing in an environment that demands constant change and innovation seems to be responsible for the emergence of lean dynamics as a recognized business improvement approach.
Lean dynamics takes a different approach. Introduced by the book, Going Lean , it does not directly target the desired outcome of waste elimination; instead, it focuses on identifying and addressing sources of "lag", or imbedded disconnects in flowing value through operations, decision-making, information, and innovation that lead to workaround
s and amplify disruption when business conditions change. It promotes a different way of structuring the business that creates an inherent "dynamic stability" or greater responsiveness for accommodating shifting business conditions. Companies that are structured in this way show dramatically greater customer value as measured by their quality, innovation, and customer satisfaction; they also sustain greater corporate value as measured by profitability, market capitalization, and growth.
Lean dynamics uses the value curve as a data-driven way of directly comparing companies to distinguish lean firms from other industries.
Implementation of lean dynamics focuses on driving down the impact that variation
has on loss (based on the loss function from the Taguchi methods
often described by the famous business statistician W. Edwards Deming), a concept describing the dramatic reduction of value-creating capabilities that traditional management systems display when subjected to sudden shifts in product demand, energy prices, or other conditions that affect operational stability or predictability.
Lean dynamics is particularly versatile in that it can be applied to a wide range of manufacturing and service industries. Its methods have been studied for Aerospace and Defense (particularly as applied to procuring hard to get spare parts), and medical, and distinguishes the few that stand out during crisis such as airlines, and retail.
Subsequent research of the aerospace industry showed that firms had accepted these findings, describing this approach of Variation Management as "...one of the most prominent approaches to transforming and improving military enterprise performance."
This phenomenon was validated by correlating the disruption caused by variation in flow (measured as cycle time variation) with "loss" as described by the Taguchi Loss Function (see Taguchi Methods
). Sudden changes in business conditions, such as spikes or decreases in production demand, cause increases in variation from forecasted conditions, causing disruption, and causing waste to accumulate. A lean dynamics approach restructures the way operations, organizations, information, and innovation are structured to overcome this.
One method for companies to deal internally with externally-driven variation (such as sudden spikes in demand), a core tenet of lean dynamics, was explored by the Defense Department under the Supplier Utilization through Responsive Grouped Enterprises (SURGE) Program. The SURGE program was partially sponsored by the Joint Strike Fighter Program (JSF)(F-35 Lightning II
) This program aimed to reduce factory disruption due to demand variation by grouping parts together that shared similar manufacturing processes. It succeeded in reducing lead time on a number of critical aerospace items by as much as 60%. The SURGE program gained notoriety when it was mentioned on the popular TV Show JAG
.
Terminology
Like lean manufacturing
Lean manufacturing
Lean manufacturing, lean enterprise, or lean production, often simply, "Lean," is a production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination...
, lean dynamics is a variation on the theme of creating efficiencies and greater value by optimizing flow rather than by maximizing economies of scale. As such, it represents an important chapter in the broader discussion of Taylorism, Fordisim, Alfred Sloan's standard volume methodology, Peter Drucker's philosophy on the "theory of the business" and Genichi Taguchi's analysis of loss. Its general philosophy has grown in popularity over recent years, in large part because of the increasingly challenging circumstances faced by the global business world (particularly evident during the 2008-2009 worldwide economic downturn.)
This need to create greater efficiencies while competing in an environment that demands constant change and innovation seems to be responsible for the emergence of lean dynamics as a recognized business improvement approach.
Overview
The term "lean" was first coined by a researcher at MIT and later popularized by the best-selling book, The Machine that Changed the World (1990). Those implementing lean principles generally focus on applying lean tools which have been described in a number of references over the past two decades with the focus of seeking out and directly targeting "waste" (its seven forms described by Taiichi Ohno in Toyota Production System are well known.) This emphasis can result in greater efficiencies that do not necessarily respond well when business conditions shift.Lean dynamics takes a different approach. Introduced by the book, Going Lean , it does not directly target the desired outcome of waste elimination; instead, it focuses on identifying and addressing sources of "lag", or imbedded disconnects in flowing value through operations, decision-making, information, and innovation that lead to workaround
Workaround
A workaround is a bypass of a recognized problem in a system. A workaround is typically a temporary fix that implies that a genuine solution to the problem is needed...
s and amplify disruption when business conditions change. It promotes a different way of structuring the business that creates an inherent "dynamic stability" or greater responsiveness for accommodating shifting business conditions. Companies that are structured in this way show dramatically greater customer value as measured by their quality, innovation, and customer satisfaction; they also sustain greater corporate value as measured by profitability, market capitalization, and growth.
Lean dynamics uses the value curve as a data-driven way of directly comparing companies to distinguish lean firms from other industries.
Implementation of lean dynamics focuses on driving down the impact that variation
Variation
- Physics :* Magnetic variation, difference between magnetic north and true north, measured as an angle* Variation , any perturbation of the mean motion or orbit of a planet or satellite, particularly of the moon- Mathematics :* Bounded variation...
has on loss (based on the loss function from the Taguchi methods
Taguchi methods
Taguchi methods are statistical methods developed by Genichi Taguchi to improve the quality of manufactured goods, and more recently also applied to, engineering, biotechnology, marketing and advertising...
often described by the famous business statistician W. Edwards Deming), a concept describing the dramatic reduction of value-creating capabilities that traditional management systems display when subjected to sudden shifts in product demand, energy prices, or other conditions that affect operational stability or predictability.
Lean dynamics is particularly versatile in that it can be applied to a wide range of manufacturing and service industries. Its methods have been studied for Aerospace and Defense (particularly as applied to procuring hard to get spare parts), and medical, and distinguishes the few that stand out during crisis such as airlines, and retail.
Background
Lean dynamics has its roots in a global study of lean manufacturing in the aerospace industry aimed at understanding how to break its cycle of cost escalation that was making new products unaffordable. These results were described in the Shingo Prize winning book, Breaking the Cost Barrier . This study showed that directly targeting “waste” reduction as the focal point for lean programs does not lead to significant cost savings. Instead, it provided strong evidence that emphasis should be placed on applying lean principles to mitigate the amplification of variation that causes workarounds. Addressing this variation was critical to overcoming the disruption that often causes waste to accumulate in the first place. Other sources cited this, identifying occurrences across other industries.Subsequent research of the aerospace industry showed that firms had accepted these findings, describing this approach of Variation Management as "...one of the most prominent approaches to transforming and improving military enterprise performance."
This phenomenon was validated by correlating the disruption caused by variation in flow (measured as cycle time variation) with "loss" as described by the Taguchi Loss Function (see Taguchi Methods
Taguchi methods
Taguchi methods are statistical methods developed by Genichi Taguchi to improve the quality of manufactured goods, and more recently also applied to, engineering, biotechnology, marketing and advertising...
). Sudden changes in business conditions, such as spikes or decreases in production demand, cause increases in variation from forecasted conditions, causing disruption, and causing waste to accumulate. A lean dynamics approach restructures the way operations, organizations, information, and innovation are structured to overcome this.
One method for companies to deal internally with externally-driven variation (such as sudden spikes in demand), a core tenet of lean dynamics, was explored by the Defense Department under the Supplier Utilization through Responsive Grouped Enterprises (SURGE) Program. The SURGE program was partially sponsored by the Joint Strike Fighter Program (JSF)(F-35 Lightning II
F-35 Lightning II
The Lockheed Martin F-35 Lightning II is a family of single-seat, single-engine, fifth generation multirole fighters under development to perform ground attack, reconnaissance, and air defense missions with stealth capability...
) This program aimed to reduce factory disruption due to demand variation by grouping parts together that shared similar manufacturing processes. It succeeded in reducing lead time on a number of critical aerospace items by as much as 60%. The SURGE program gained notoriety when it was mentioned on the popular TV Show JAG
JAG (TV series)
JAG is an American adventure/legal drama television show that was produced by Belisarius Productions, in association with Paramount Network Television and, for the first season only, NBC Productions...
.
See also
Those areas below are linked to this subject:- Lean ManufacturingLean manufacturingLean manufacturing, lean enterprise, or lean production, often simply, "Lean," is a production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination...
- Toyota Production SystemToyota Production SystemThe Toyota Production System is an integrated socio-technical system, developed by Toyota, that comprises its management philosophy and practices. The TPS organizes manufacturing and logistics for the automobile manufacturer, including interaction with suppliers and customers...
- Taguchi Loss FunctionTaguchi loss functionThe Taguchi Loss Function is a graphical depiction of loss developed by the Japanese business statistician Genichi Taguchi to describe a phenomenon affecting the value of products produced by a company. Praised by Dr. W...
- Six SigmaSix SigmaSix Sigma is a business management strategy originally developed by Motorola, USA in 1986. , it is widely used in many sectors of industry.Six Sigma seeks to improve the quality of process outputs by identifying and removing the causes of defects and minimizing variability in manufacturing and...
- Statistical Process ControlStatistical process controlStatistical process control is the application of statistical methods to the monitoring and control of a process to ensure that it operates at its full potential to produce conforming product. Under SPC, a process behaves predictably to produce as much conforming product as possible with the least...
Terminology
- Variation Management
- Value Curve
- Production LevelingProduction levelingProduction leveling, also known as production smoothing or – by its Japanese original term – , is a technique for reducing the muda waste and vital to the development of production efficiency in the Toyota Production System and Lean Manufacturing...
- Muda, MuraMura (Japanese term)Mura is traditional general Japanese term for unevenness, irregularity or inconsistency in physical matter or human spiritual condition. It is also a key concept in performance improvement systems such as the Toyota Production System. Mura is one of the three types of waste . Waste reduction is an...
, MuriMuri (Japanese term)Muri is a Japanese term for overburden, unreasonableness or absurdity, which has become popularized in the West by its use as a key concept in the Toyota Production System.-Avoidance of muri in Toyota manufacturing:... - WorkcellWorkcellA workcell is an arrangement of resources in a manufacturing environment to improve the quality, speed and cost of the process. Workcells are designed to improve these by improving process flow and eliminating waste...
- Cycle Time VariationCycle time variationCycle time variation is a proven metric and philosophy for continuous improvement with the aim of driving down the deviations in the time it takes to produce successive units on a production line. It supports organizations' application of lean manufacturing or lean production by eliminating...