Summary of Concepts and Terms Associated with Lean

Summary of Concepts and Terms Associated with Lean
Lean Company, Lean Enterprise, Japanese Management, JIT, and Kaizen

The purpose of this summary is to list and briefly define the terminology associated with a lean organization and to provide links to other summaries and materials where more specific information can be found. I started with the 19-item Lean Toolbox that appears in an article by DeWayne Searcy¹, and then added a number of additional concepts and techniques. The terms lean production, lean company, lean enterprise, Japanese management methods, the Toyota way, Toyota production system, just-in-time, and kaizen have all been used as umbrella terms by various authors. However, the term "lean" is more commonly used today to describe the concepts and techniques used by the most competitive organizations, or what some authors refer to as world class organizations. The concepts and terms associated with lean are as follows.

Concepts and Terms Associated with Lean
Concept or Technique	Defined	References
Lean Company	The lean enterprise model developed by Womack and Jones makes a distinction between a lean company and a lean enterprise. A lean company is one that embraces the lean production approach developed by Toyota, e.g., where unnecessary steps are eliminated, all steps in an activity are aligned in a continuous flow, and labor is organized into cross-functional teams with emphasis on continuous improvement. In the lean enterprise model, a company is part of a value stream that may include many interrelated companies.	Womack, J. P. and D. T. Jones. 1994. From lean production to the lean enterprise. Harvard Business Review (March-April): 93. (Summary). See MAAW's Chapter 8 for more on the lean production approach defined there as just-in-time.
Value Stream and Value Stream Mapping	A value stream links all the companies along the value chain that are involved in creating, selling, and servicing a family of products. The value stream includes all the activities within each company that are required to design, produce, and deliver a specific product to the customer and service the product after delivery. Value stream mapping involves identifying all the specific activities along the value stream required for a product or product family.	See MAAW's Chapter 8 for more on the value chain concept. Womack, J. P. and D. T. Jones. 1994. From lean production to the lean enterprise. Harvard Business Review (March-April): 93. (Summary). Baggaley, B. and B. Maskell. 2003. Value stream management for lean companies, Part I. Journal of Cost Management (March/April): 23-27. (Summary). Womack, J. P. and D. T. Jones. 1996. Beyond Toyota: How to root out waste and pursue perfection. Harvard Business Review (September-October): 140-144, 146, 148-152, 154, 156, 158. (Summary).
Lean Enterprise	"The lean enterprise is a group of individuals, functions, and legally separate but operationally synchronized companies. The notion of the value stream defines the lean enterprise". Linking lean companies to form a lean enterprise is difficult and requires a new lean behavioral model for individuals, functions, and companies.	Womack, J. P. and D. T. Jones. 1994. From lean production to the lean enterprise. Harvard Business Review (March-April): 93 and 99. (Summary).
Lean Behavior	Although individuals, functions, and companies have legitimate needs that conflict with those of the value stream, creating a lean enterprise requires a high degree cooperation across individuals, functions and companies. Individuals need to accept an alternating career path that focuses on a specific value stream as well as knowledge building within a functional area. Sole allegiance to a function (e.g., engineering, accounting, marketing) is not acceptable. Functions no longer perform the function, but become support groups for value creating teams. Functions serve as schools that create and summarize knowledge providing guidelines or best practices for how their function (e.g., engineering, purchasing, production) should be performed. Cross-functional product development and production teams perform the functions. Companies need a new code of behavior that includes an agreement on the principles for verifying and regulating the behavior within the value stream. For example, this might include process audits to make the activities of each company transparent to up stream and down stream members. Each value stream needs a team leader represented by a company that organizes and leads the member companies of the lean enterprise. Companies also need to become more focused on a narrower set of tasks that they can do well, and to participate in several enterprises and a range of streams involving different products or services.	Womack, J. P. and D. T. Jones. 1994. From lean production to the lean enterprise. Harvard Business Review (March-April): 94-100. (Summary).
Lean Culture	Lean requires cultural change. Extreme individualism must be replaced by more collectivist or cooperative behavior. Lean behavior is required from everyone in the organization as everyone understands his or her role. Workers in lean environments know who their customers are, both internal and external, and place emphasis on customer satisfaction, a clean, safe, and orderly environment with everything in its place, as well as teamwork, cooperation in problem solving, and employee empowerment. Imai defines culture as "factors of industrial structure and psychology that determine the company's overall strength, productivity, and competitiveness in the long term; such factors include organizational effectiveness, industrial relations, and the capacity to produce quality products economically."	Searcy, D. L. 2012. Unleashing lean's potential, one behavior at a time. Strategic Finance (January): 40-45. Goodson, R. E. 2002. Read a plant - fast. Harvard Business Review (May): 105-113. (Summary). Imai, M. 1986. Kaizen: The Key To Japan's Competitive Success. New York: McGraw-Hill Publishing Company. p. 220. (Summary).
Lean Enterprise versus Japanese Keiretsu	Conceptually the lean enterprise and Japanese keiretsu are similar, but different. The Japanese keiretsu structure involves a group of companies that take equity stakes in each other. Participants in a lean enterprise must be free to replace a member company if it fails to follow the established code of behavior.	Womack, J. P. and D. T. Jones. 1994. From lean production to the lean enterprise. Harvard Business Review (March-April): 103. (Summary).
Value Stream Costing	Value stream costing includes a simpler cost collection method and reduces the number of cost centers. All costs of the value stream are considered direct costs. Costs included in the value stream are production labor, production materials, production support, machines and equipment, operation support, facilities and maintenance, and all other value stream costs.	Baggaley, B. and B. Maskell. 2003. Value stream management for lean companies, Part II. Journal of Cost Management (May/June): 24-30. (Summary).
Five S	Organizaton and maintenance of the work area: Seiri - straighten up, organize and discard the unneccessary. Seiton - arrange things in order. Seiso - clean up the workplace. Seiketsu - incorporate personal orderliness & neatness into your work habits. Shitsuke - use discipline in following workplace procedures.	JIT Summary. Deluzio, M. C. 1993. The tools of just-in-time. Journal of Cost Management (Summer): 13-20. (Summary). Womack, J. P. and D. T. Jones. 1996. Lean Thinking: Banish Waste and Create Wealth in Your Organization. Simon & Shuster. pp. 61, 306, 319. Imai, M. 1986. Kaizen: The Key To Japan's Competitive Success. New York: McGraw-Hill Publishing Company. Appendix B. (Summary).
Five Whys	Taiichi Ohno's practice of asking why five times when a problem is encountered to identify its root cause.	Deluzio, M. C. 1993. The tools of just-in-time. Journal of Cost Management (Summer): 13-20. (Summary). Womack, J. P. and D. T. Jones. 1996. Lean Thinking: Banish Waste and Create Wealth in Your Organization. Simon & Shuster. p. 306. Five whys examples.
Five Ws and One H.	Who - Who does it? Who is doing it? Who should be doing it? Who else should do it? Who is doing 3-MUs? Muda or waste, Muri or strain, and Mura or discrepancy. What - What to do? What is being done? What should be done?, What else can be done? What else should be done? and What 3-Mus are being done?, Where - Where to do it? Where is it done? Where should it be done? Where else can it be done? Where else should it be done? Where are 3-MUs being done? When - When to do it? When is it done? When should it be done? What other time can it be done? What other time should it be done? Are there any time 3-MUs? Why - Why does he do it? Why do it? Why do it there? Why do it then? Why do it that way? Are there any 3-Mus in the way of thinking? How - How to do it? How is it done? How should it be done? Can this method be used in other areas? Is there any other way to do it? Are there any 3MUs in the method?	Imai, M. 1986. Kaizen: The Key To Japan's Competitive Success. New York: McGraw-Hill Publishing Company. Appendix C. (Summary).
Total Productive Maintenance	Emphasis on preventive (operator centered) maintenance and replacing parts before the break.	Womack, J. P. and D. T. Jones. 1996. Lean Thinking: Banish Waste and Create Wealth in Your Organization. Simon & Shuster. pp. 60, 149,244, 310-311.
Setup Reduction, Mixed-Model Production & Flexible Manufacturing	The ability to produce several products on the same line in a random order. Making just what is sold - every day. Harley-Davidson assembles mixed models in lots of one. They call them "jelly beans."	Schonberger, R. J. 1986. The World Class Manufacturing: The Lessons of Simplicity Applied. The Free Press. pp. 9, 191-192. Horngren, C. T., and G. Foster. 1988. Flexible manufacturing systems: Cost management and cost accounting implications. Journal of Cost Management (Fall): 16-24.
Standard Work	Emphasis on optimizing the flow of work. All processes are done in the same order, with the same tools, according to the same specifications. Every connection between employees must be standardized, direct, and unambiguous. Every product and service flows along a specified, direct path. Each work activity is precisely defined by cycle time, takt time, work sequence and parts.	Deluzio, M. C. 1993. The tools of just-in-time. Journal of Cost Management (Summer): 13-20. (Summary). Spear, S. and H. K. Bowen. 1999. Decoding the DNA of the Toyota production system. Harvard Business Review (September-October): 97-106. (Summary). Womack, J. P. and D. T. Jones. 1996. Lean Thinking: Banish Waste and Create Wealth in Your Organization. Simon & Shuster. p. 310.
Method Sheets	Guidelines that graphically indicate standard procedures	Schonberger, R. J. 1986. The World Class Manufacturing: The Lessons of Simplicity Applied. The Free Press. Methods diagrams pp. 32-33, 193.
Quality Assurance	Emphasis on detecting and eliminating defects. Autonomation - automated machinery with the intelligence to detect a defective part and stop the line. Jidohka - to identify and correct problems when and where they occur.	MAAW's Chapter 8 JIT section. Spear, S. and H. K. Bowen. 1999. Decoding the DNA of the Toyota production system. Harvard Business Review (September-October): 97-106. (Summary).
Mistake Proofing or Fail Safe Devices	Emphasis on eliminating or reducing the possibility of errors. Poka-yoke - Fail safe devices such as warning bells, timers, electric eyes and alignment templates are used to prevent problems from occurring.	Deluzio, M. C. 1993. The tools of just-in-time. Journal of Cost Management (Summer): 13-20. (Summary). Chase, R. B. and D. M. Stewart. 1994. Make your service fail-safe. Sloan Management Review (Spring): 35-44. Womack, J. P. and D. T. Jones. 1996. Lean Thinking: Banish Waste and Create Wealth in Your Organization. Simon & Shuster. p. 308.
Production to Takt Time	The pace of production is based on customer demand. Takt time is the available production time divided by the rate of customer demand.	Deluzio, M. C. 1993. The tools of just-in-time. Journal of Cost Management (Summer): 13-20. (Summary). Womack, J. P. and D. T. Jones. 1996. Lean Thinking: Banish Waste and Create Wealth in Your Organization. Simon & Shuster. pp. 55-56, 310.
Supply chain Integration	Lean factories work closely with a small number of dedicated suppliers that are part of the process and are paid based on completed, shippable product.	Goodson, R. E. 2002. Read a plant - fast. Harvard Business Review (May): 105-113. (Summary).
Flow Cells or Cellular Factory Layout	Layout of machines of different types to perform different operations in a tight sequence to permit single-piece flow and eliminate unnecessary materials movement.	MAAW's Chapter 8, JIT section. Deluzio, M. C. 1993. The tools of just-in-time. Journal of Cost Management (Summer): 13-20. (Summary). Womack, J. P. and D. T. Jones. 1996. Lean Thinking: Banish Waste and Create Wealth in Your Organization. Simon & Shuster. p. 305.
Visual Controls	Andon boards or visual control devices such as a lighted overhead display showing the current status of the production system to alert workers to emerging problems.	Deluzio, M. C. 1993. The tools of just-in-time. Journal of Cost Management (Summer): 13-20. (Summary). Womack, J. P. and D. T. Jones. 1996. Lean Thinking: Banish Waste and Create Wealth in Your Organization. Simon & Shuster. p. 305. Schonberger, R. 1990. Building a Chain of Customers: Linking Business Functions to Create The World Class Company. The Free Press. pp. 42-43.
Gemba Walks	Taking a look at the entire process.	Womack, J. P. and J. Shook. 2011. Gemba Walks. Lean Enterprise Institute.
One-Piece Flow	The ability to produce one part at a time or the quantity needed down stream through various operations without interruptions, back flows or scrap. Chaku-chaku - a method of single-piece flow.	Womack, J. P. and D. T. Jones. 1996. Lean Thinking: Banish Waste and Create Wealth in Your Organization. Simon & Shuster. pp. 305 and 310.
Mixed-Model Production	The ability to produce several products on the same line in a random order. Making just what is sold - every day. Harley-Davidson assembles mixed models in lots of one. They call them "jelly beans." A related concept is flexible manufacturing.	Schonberger, R. J. 1986. The World Class Manufacturing: The Lessons of Simplicity Applied. The Free Press. pp. 9, 191-192. Horngren, C. T., and G. Foster. 1988. Flexible manufacturing systems: Cost management and cost accounting implications. Journal of Cost Management (Fall): 16-24.
Point-of-Use Storage	Preparation of work areas for the presentation of supplied materials.
Design for Manufacturing	Including manufacturing capabilities in the design phase of the product. Making sure that design has a customer focus and is closely integrated with the rest of the organization.	Schonberger, R. J. 1986. The World Class Manufacturing: The Lessons of Simplicity Applied. The Free Press. Chapter 8: Design Leverage.
Complexity Reduction	Decreasing parts or operations for a product by simplifying the product design and increasing component usage. Lean companies build complexity handling into the production process with systems that use common parts and fail-safe devices that guide workers to choose the appropriate part and perform the appropriate action.	Goodson, R. E. 2002. Read a plant - fast. Harvard Business Review (May): 105-113. (Summary). Swenson, D. W. 1998. Managing costs through complexity reduction at Carrier Corporation. Management Accounting (April): 20-22, 24, 26-28. (Summary).
Kanban/Pull Production	A card attached to boxes of parts that signals upstream operations when a new part is needed to regulate the demand pull flow of work.	MAAW's Chapter 8 JIT section. Womack, J. P. and D. T. Jones. 1996. Lean Thinking: Banish Waste and Create Wealth in Your Organization. Simon & Shuster. p. 307.
Kaizen and Kaizen Events	Kaizen is continuous incremental improvement to create more value with less muda or waste. All improvements are made according to the scientific method. A kaizen event is a focused improvement exercise. Shewhart-Deming plan-do-check or study-action (PDCA or PDSA) cycle. Schonberger's improvement toolkit - includes about 50 concepts including most of the ones in this table.	MAAW's Chapter JIT section. Spear, S. and H. K. Bowen. 1999. Decoding the DNA of the Toyota production system. Harvard Business Review (September-October): 97-106. (Summary). Womack, J. P. and D. T. Jones. 1996. Lean Thinking: Banish Waste and Create Wealth in Your Organization. Simon & Shuster. p. 307. Imai, M. 1986. Kaizen: The Key To Japan's Competitive Success. New York: McGraw-Hill Publishing Company. (Summary). Schonberger, R. 1990. Building a Chain of Customers: Linking Business Functions to Create The World Class Company. The Free Press. p. 301.
Statistical tools used for continuous improvement	Some of the statistical tools used in the continuous improvement cycle include: 1. Pareto diagrams, 2. Fishbone, or cause and effect diagrams, 3. Histograms, 4. Other graphs and charts, e.g., pie charts, 5. Control charts and 6. Scatter diagrams and related techniques, e.g., regression and correlation analysis. Others include: Relations diagrams, affinity diagrams, tree diagrams, matrix diagrams, matrix data-analysis diagrams, process decision program charts (PDPC), and arrow diagrams.	MAAW's Chapter JIT section. Hayes, R., S. Wheelwright and K. Clark. 1988. Dynamic Manufacturing: Creating the Learning Organization. The Free Press. Imai, M. 1986. Kaizen: The Key To Japan's Competitive Success. New York: McGraw-Hill Publishing Company. Appendix E Kaizen Problem Solving tools. (Summary).
The Toyota Way	A summary of many concepts: 1. Base decisions on a long-term strategy, 2. Create a continuous process flow, 3. Use pull systems, 4. Level the work load to minimize waste, 5. Stop the line to fix problems, 6. Standardize processes and tasks, 7. Use visual controls, 8. Use reliable thoroughly tested technology, 9. Develop leaders, 10. Develop teams, 11. Respect partners and suppliers, 12. Use go-and-see for yourself management, 13. Use consensus decisions, 14. Become a learning organization through continuous improvement.	Liker, J. 2003. The Toyota Way: 14 Management Principles From The World's Greatest Manufacturer. McGraw-Hill.
Ergonomic Design	Design processes to mimic natural human movements.
Cross-Training	Training workers to perform multiple tasks so that they can rotate job assignments to prevent boredom, and be moved from job to job to fill in for injured, sick or vacationing employees.	Fucini, J. J. and S. Fucini. 1990. Working for the Japanese: Inside Mazda's Auto Plant. The Free Press. Various pages including Chapter 6. Schonberger, R. 1990. Building a Chain of Customers: Linking Business Functions to Create The World Class Company. The Free Press. pp. 125-126. Imai, M. 1986. Kaizen: The Key To Japan's Competitive Success. New York: McGraw-Hill Publishing Company. Chapter 6. (Summary).