Each of these Core Values support our commitment to:
- Customer Value
- Best People
- Servant Leadership
Customer Value – What it Means to Us
We have a culture where the Customer,
- Is the one who determines the Value Added and Non-Value Added work
- Benefits from operational improvements in processing time, quality, productivity, etc.
- Is recognized as why we exist – to offer value the way the Customer wants it
- Is considered a partner where our joint efforts are to deliver value to Their Customers
Best People – What it Means to Us
- Are willing to contribute beyond production requirements,
- Are willing to learn new skills to contribute at another level,
- Look for opportunities for improvement every day,
- Relentlessly and aggressively pursue excellence,
- Are committed to taking care of the customer,
- Are committed not to pass on defects to customers,
- Take ownership of both issues and solutions
- Continuously grow knowing that the greatest benefit derived from improving a process is what the team members learn and what they do with that knowledge in the future
Servant Leadership – What it Means to Us
- Recognize that the real process experts are the people that do the work,
- Demonstrate appreciation for the people who actually perform the client-facing work,
- Invest in the people who do the work, find the errors and will develop solutions,
- Develop a hatred for the status quo because of a conviction that it can be better,
- Understand that the process fails far more frequently than the people do,
- Willingly and openly admit that the system is broken and needs to be fixed,
- Take accountability for process errors instead of blaming team members
Why All Employees Should be Trained to See and Eliminate Waste
Training employees in “learning to see” waste and engaging employees in waste elimination and the process of process improvement will generate greater returns than simply improving the process. Additional benefits which result from well-executed Kaizen/coaching activities include,
- Improving employee morale
- Promoting team members’ ownership of process efficacy and improvements
- Promoting team members’ sense of ownership to take action on improvement opportunities
- Dramatically widening the base of continuous improvement champions
- Cultivating an environment open to more advanced operational improvement concepts and methods
In fact, the ROI resulting from the elimination of waste in a process is insignificant compared to the ROI produced repeatedly by a team member who has learned to eliminate waste and reduce costs over and over again! Thus, the greatest benefit derived from improving a process is what the team members learn and what they do with that knowledge in the future.
Glossary of Operational Excellence Principles & Terms
1:10:100 Rule – The cost of a defect is exponentially proportional to the distance between the point of cause and the point of detection. The cost of poor quality increases exponentially as a product or service moves along the value stream from creation to consumption. Preventing a defect at the point of origination might cost $10, whereas correcting a defect at the end of the process after additional value has been added might cost $100 – 10 times as much. If the defect is not detected, and the same product or service is provided to a customer, the cost could be even higher and compounded by the lost customer loyalty and lost business – which may be many times the cost of correcting a defect earlier in the process.
3 Elements of Demand – The three drivers of customer satisfaction are Quality, Cost, and Delivery.
3 Elements of JIT – The three elements of JIT are 1) takt time, 2) flow production, and 3) the downstream pull system.
3 Gen Principle – The three principles are 1) shop floor (gemba), 2) the actual product (gembutsu), and 3) the facts (genjitsu). The key to successful kaizen is to going to the shop floor, working with the actual product and getting the facts.
3D’s – Working conditions or jobs that are dirty, dangerous, or difficult.
3P’s – Production Preparation Process.Rapidly designing production processes and equipment to ensure capability, built-in quality, productivity, and Takt-Flow-Pull. The Production Preparation Process minimizes resources needed such as capital, tooling, space, inventory, and time.
5 Why’s – A simple but effective method of analyzing and solving problems by asking ‘why?’ five times (or as many times as needed to find the root cause.
5M’s of Production – Man, Machine, Material, Method, and Measure. Understand these factors and the establishment of standards are key steps in strengthening the production processes.
5S – The principle of waste elimination through workplace organization.Derived from the Japanese words seiri, seiton, seiso, seiketsu, and shitsuke. In English the 5S are sort, straighten, sweep, standardize, and self-discipline.
6 Sigma – See Six Sigma.
7 Tools of QC – Data gathering and analysis tools used for kaizen activities originally by QC Circles. They are 1) check sheets, 2) cause and effect diagrams, 3) Pareto diagrams, 4) histograms, 5) graphs, 6) scatter diagrams, and 7) broken line graphs.
7 Wastes of Production – There are 7 types of waste that describe all wasteful activity in a production environment. Elimination of the 7 wastes leads to improved profits. The 7 wastes are 1) Overproduction, Transportation, Motion, Waiting, Processing, Inventory, and Defects.
8th Waste – Skills waste, or the under-utilization of people was considered by Shigeo Shingo to be the worst waste of all.
A3 Report – This “A3” sized (11 inches x 17 inches) form is used at Toyota as a one-sheet problem evaluation, root cause analysis, and corrective action planning tool. It often includes sketches, graphics, flow maps or other visual means of summarizing the current condition and future state. Click here for A3 form template.
ABC – See Activity Based Costing.
Abnormality Management – Being able to see and quickly take action to correct abnormalities (any straying from Standard Work). This is the goal of standardization and visual management. Continuous waste elimination and problem solving through Kaizen are only possible when the abnormalities are visible.
Action Plan – A series of planned activities with established accountabilities and delivery dates which, when complete, will result in the accomplishment of an objective.
Activity Based Costing – A management accounting system that assigns cost to products based on the resources used to perform a process (design, order entry, production, etc. These resources include floor space, raw materials, energy, machine time, labor, etc.
Activity – A series of tasks within a process or sub-process.
Activity-based Costing – A cost allocation method based on the cost driver.
Adding Value – Making the output of a process worth more for its customers.
Adoption Rate – The percentage of total projects completed which have been implemented.
Affinity Diagram – One of the seven new management-planning tools. It is used to organize ideas into natural groupings in a way that stimulates creativity. Categories and new ideas are obtained by team members working silently so as not to inhibit thoughts.
Andon – A tool of visual management, originating from the Japanese word for ‘lamp.’ Most commonly, andons are lights placed on machines or on production lines to indicate operational status. Andons are commonly color-coded green (normal operations), yellow (changeover or planned maintenance) and red (abnormal, machine down). Andons are often combined an audible signal such as music or alarms.
Arrow Diagram – One of the seven new management-planning tools. IT is used to develop the best schedule and appropriate controls to accomplish the schedule. An arrow diagram is similar to the critical path method (CPM) and program evaluation review technique (PERT).
Attribute – A measurable characteristic of a product, process, or outcome.
Auto Time – See Automatic Time.
Automatic Time – The time when a machine is running on auto cycle and a person does not needed to be there to operate the machine. Commonly used for NC machine cycles, oven cycles, wash cycles, etc. Also Auto Time.
Autonomation – Machines are given ‘human intelligence’ and are able to detect and prevent defects. Machines stop autonomously when defects are made, asking for help. Autonomation was pioneered by Sakichi Toyoda with the invention of automatic looms that stopped when a thread broke, allowing an operator to manage many looms without risk of producing large amounts of defective cloth. Autonomation is a pillar of the Toyota Production System. See also Jidoka.
Balanced Operations – so that all operations take about the same time. A corollary to this principle is to go only as fast as the slowest operation in order not to build an inventory.
Bar Chart – A chart that uses a set of bars to compare the sizes of related items.
Barriers & Aids – A technique for pinpointing and analyzing elements, which resist change (barriers) or push for change (aids).
Benchmarking – Comparing key performance metrics with other organization in similar or relevant industries. Establishing standards for improvement based on what others have been able to achieve. Visiting or interviewing peers to learn from what they have done. Also called competitive benchmarking.
Bill of Material – A listing of material required to perform a specific job.
Black Belt – A full time person intensively trained in the quality management systems and advanced statistical tools and methods. A person assigned to work on critical business problems/opportunities alone or with teams.
Bottleneck – A process in any part of the enterprise (office, production, sales, etc.) that limits the throughput of the whole process.
Boundaries – A statement of where a process or sub-process begins and ends and what it includes.
Brainstorming – A way of using a group of people to quickly generate, clarify and evaluate a sizable list of ideas, problems, issues, etc.
Breakthrough Objectives – Objectives that are ‘stretch goals’ for the organization. Breakthroughs represent a significant change for the organization providing a significant competitive advantage. Breakthrough goals are achieved through multi-functional teamwork.
Breakthrough – A significant increase in performance.
Brownfield – An existing and operating production facility that is set up for mass-production manufacturing and management methods.
Budget – A time-oriented statement of the financial resources allocated to carry out an organization’s activities and achieve the targeted objectives.
Carrying Costs – The annual costs of holding inventory.
Catch Ball – An iterative process of developing objectives and plans to obtain the objectives; sharing them with persons who much execute the plans; requesting and considering their input; and finalizing the objectives and plans after sufficient involvement and commitment from all affected parties.
Cause & Effect Analysis – A problem solving tool used to identify relationships between effects and multiple causes.
Cause & Effect Diagram – One of the basic seven process improvement tools. It is used to identify root causes are identified, “Why?” is asked five times to ensure that root causes, not symptoms, are being addressed. (also Fishbone Diagram, Ishikawa Diagram).
Cause – An established reason for the existence of a defect.
Cellular Manufacturing – An alignment of processes and equipment in correct process sequence, where operators work within the cell and materials are presented to them from the outside of the cell. Often, cellular manufacturing has not taken into account waste elimination or Standard Work principles, and therefore greater savings have not been realized.
Chaku-Chaku Line – A production line where the only human activity is to ‘chaku’ or ‘load’ the machines. The machines eject the finished parts automatically using hanedashi, so that the operators do not have to wait.
Change Agent – Someone whose objective is to help cause the transformation from Current State (traditional manufacturing, e.g. batch and queue) to Future State (Lean Enterprise). Someone who leads the cultural change in an organization.
Change Management – The process of planning, preparation, education, resource allocation, and implementation of a cultural change in an organization.
Changeover – The time from when the last good piece comes off of a machine or process until the first good piece of the next product is made. Changeover time includes set up, warm up, trial run, adjustment, first piece inspection, etc.
Check Sheet –A simple but powerful data gathering tool.
Checkpoint – An upstream process standard. Statistically, it means to eliminate special causes of variation. Also called maintenance. In Japan, control is equivalent to management.
Common Cause – A frequent source of variation in the output of a process.
Concurrent Engineering – Designing a product (or service), its production process, the supporting information flow, and its delivery mechanism at the same time. The benefits include shorter development time from concept to market, a higher product quality, lower overall development cost and lower product or service unit cost. Concurrent engineering requires up-front planning and dedicated resources early in the early stages of development.
Constraint – See bottleneck.
Continuous Data – Data that can be measured. For example, the time required to perform a process activity (also called “variables” data).
Continuous Improvement (PDCA) – A cycle of continuous improvement that has four phases:
Continuous Improvement – The never-ending pursuit of waste elimination by creating a better workplace, better products, and greater value to society.
Control Chart – A statistical problem solving tool that indicates control of a process within established limits and used to determine whether or not variation is due to common or special causes. It is one of the seven basic process improvement tools.
Control Element – Any specific process variable that must be controlled. The measurement of a control element indicates whether the process is operating under stable conditions.
Control Point – A process output, such as defects or yield.
Control System – A tool for providing process stability that defines the process activities, key indicators, targets, and related management criteria, so that variation can be detected and reduced.
Control – The existence of a desired state in the output of a process (also see Quality Control).
Corporate Vision – The long-range objective of the corporation.
Cost Driver – An activity that results in costs being incurred.
Cost Estimation – A technique for determining the dollar impact of problems and improvements.
Cost of Poor Quality – Costs associated with supplying a poor quality product. Categories of cost include internal and external failure costs. See 1:10:100 Rule.
Cost of Quality – Really the cost of bad quality or of not doing things right the first time. It consists of four major categories.
Counter Measures – Actions taken to bring less than expected results of a process back up to targeted levels.
Counter-Clockwise Flow – A basic principle of Lean manufacturing cell layout is that the flow of material and the motion of people should be from right to left, or counterclockwise. The origin of this idea came from the design of lathes and machine tools with the chucks on the left side, making it easier for right-handed people to load from right to left.
Countermeasure – The means or method to solve a problem or close the gap between the desired and current states.
Critical of Quality (CTQ) – What you manage and measure in the process that has a direct effect on the performance (or perceived performance) of the product or service in the hands of the customer.
Cross-Functional Management – One of the three major components of the management system of Japanese companies with mature TQ (Total Quality) capability. Cross-functional management consists or permanent committees for major processes (such as new product development) and outcomes (such as cost reduction). These committees are comprised of managers representing all major functions. The role of the committees is to plan and ensure the attainment of major cross-functional endeavors to which they are assigned.
Culture – An organization’s culture reflects commonly shared language, beliefs, values, relationships, and behaviors. Whether a culture is customer-focused or inside-focused depends on whose needs primarily direct the development, creation, and modification of products. The measures used to manage the organization reveal the culture’s real priorities.
Customer Information System – The system which is used to access customer data to respond to customer inquiries and arrange customer service orders.
Customer Satisfaction – Satisfying the needs and reasonable expectations of customers with an attitude that puts the needs of the customer first.
Customer – Any individual or function that receives a product or desired outcome (end-user).
Customer-Processor-Supplier – The three simultaneous roles played by everyone involved in a process.
Customer-Supplier Alignment – A close working relationship between two parties, one of whom supplies the other, to ensure that the needs of each are being met.
Cycle Time – Cycle time is the time it takes to do one repetition of any particular task. Cycle time can be categorized into 1) manual cycle time, 2) machine cycle time, and 3) auto cycle time. Also referred to as touch time or hands-on time.
Daily Management (DM) – One of the three major subsystems used by Japanese companies with mature TQ capability. Daily management relates to continuous/incremental process improvement and standardization activities. It involves all persons and includes group process improvement activities as well as individual suggestion systems.
Daily Management – The day-to-day activities that are required to serve the customers and ensure that the business is generating profit.
Data – Information or a set of facts presented in descriptive form.
Days Supply of Inventory – Total number of days (if the production level equals zero) that it would takes to deplete finished goods inventory for the specified product line.
Debt Capital – Funds obtained for business use by borrowing money.
Defect – Non-conformance to a standard requirement.
Deming Cycle – The same as the plan-do-check-act cycle; also called the Shewhart cycle.
Design of Experiments (DOE) – A statistical method of designing experiments used in the development and optimization of products and processes. These methods enable product and process designers to find the optimal or nearly optimal design parameters to obtain a robust design without having to test thousands or millions of potential parameter combinations. There are two approaches to DOE: the classical school and the Taguchi methods.
Designed for Manufacturing and Assembly (DFMA) – A way of improving cost, quality, and safety of the manufacturing and assembly processes by design.
Detection – An outcome-oriented approach to quality management based on after-the-fact identification of a problem.
DFSS (Design for Six Sigma/DMADV: Define, Measure, Analyze, Design, Validate) – A standard method for designing a new product or process capable of delivering Six Sigma level quality.
Direct Cost – A cost directly traceable to the production of a product or delivery of a service.
Discrete Data – Data that can be counted. For example, the number of defects (also called “attribute data”).
Dispersion – The extent to which data is scattered around its median (also called “variation”).
DMAIC – (Define, Measure, Analyze, Improve, Control) – The standard steps for improving an existing process to a Six Sigma level.
DOE – See Design of Experiment.
Downstream Pull System – See Pull System.
DPMO (Defects per Million Opportunities) – Every product or service has “x” number of CTQ’s or “Opportunities for Defects.” DPMO is the measure of the AVERAGE number of defects across ALL CTQ’s that the current process will produce if not improved. Therefore, an automotive supplier with a 6 sigma process will NOT produce 3.4 defective transmissions per million. Rather, each transmission would have an average defects per million opportunities.
DSI – See Days Supply of Inventory.
Economic Order Quantity – A calculation used to determine the cost-effective quantity to order based on the time demand for material, the cost of material and the cost to order material.
Efficient Allocation of Resources – Directing the resources (money, labor, time, machinery, land, etc.) to those activities where they can produce goods and services of the greatest value.
Elements of Work – The elements of work are 1) value-added work, 2) non value-added work, and 3) waste. Thoroughly understanding the elements of work is a key first step to lean thinking.
Empowerment – Giving employees the tools (such as knowledge) to eliminate process variation as well as the responsibility, control, and authority for doing so. Further, it means that employees can use their own discretion to exceed the existing job standard if they feel it is required to ensure customer satisfaction.
End-User – The customer for whom the product is primarily intended. This customer will personally use the product to achieve a desired outcome.
EPE – See Every Product Every.
Every Part Every – Measured in terms of time (hours, days, weeks, months, etc.) “Every Product Every X” indicates the level of flexibility to produce whatever the customer needs. For instance, Every Product Every day would indicate that changeovers for all products required can be performed each day and the products can be supplied to the customer.
Executive Committee – The top management committee.
Expectations – Customer expectations are their basis for determining what “quality” means. Customers have expectations about the performance and perception attributes of the product as well as the outcomes to be achieved by using the product.
External Failures – This is the cost associated with correcting a bad product or service when it is with an external customer, for example, warranty expenses or product liability.
External Set-Up – All set-up tasks that can be done while the machine is still running. Examples are collecting tools, the next piece of material, preparing or fixtures. Moving set-up activities from internal to external in order to reduce machine down time is a central activity of set-up reduction and SMED.
Failure Mode Analysis (FMA) – A procedure to determine which malfunction symptoms appear immediately before or after a failure of a critical parameter in a system. After all the possible causes are listed for each symptom, the product is designed to eliminate the problems.
Failure Modes and Effects Analysis (FMEA) –A structured approach to determining the seriousness of potential failures and for identifying the sources of each potential failure. The aim is to identify possible failures and implement corrective actions to prevent failures.
Failure Mode Effects And Criticality Analysis (FMECA) – a procedure that is performed after a failure mode effects analysis to classify each potential failure effect according to its severity and probability of occurrence.
FIFO – See also First-in First-out.
First-in First-out – Also known as FIFO, a system of keeping track of the order in which information or materials need to be processed. The goal of FIFO is to prevent earlier orders from being delayed unfairly in favor of new orders.
Fishbone Diagram – See “Cause-and-Effect Diagram.” (also, Ishikawa Diagram).
Fitness for Use – A term used to indicate that a product or service fits the customer’s defined purpose for that product or service.
Five S – See 5S.
Five Why – See 5 Why.
Flow Chart – A problem-solving tool that maps out the steps in a process visually. The flow (or lack thereof) becomes evident and the wastes and redundancies are identified.
Flow Production – A way of doing things in small quantities in sequential steps, rather than in large batches, lots or mass processing. Product (or service) moves (flows) from process to process in the smallest, quickest possible increment (one piece). Only acceptable quality products or services are accepted by the downstream customer. See also One-Piece Flow.
Flow Chart – A graphical representation of the steps in a process. Flowcharts are drawn to better understand processes. The flowchart is one of the seven tools of quality.
FMA – Failure Mode Analysis.
FMEA – Failure Mode Effects Analysis.
FMEA – See Failure Modes and Effects Analysis.
Funnel Experiment – An experiment that demonstrates the effects of tampering. Marbles are dropped through a funnel in an attempt to hit a flat-surfaced target below. The experiment shows that adjusting a stable process to compensate for an undesirable result or an extraordinarily good result will produce output that is worse than if the process had been left alone.
Gap – The difference between customer expectations and supplier performance.
Gemba Production System – A manufacturing operations transformation strategy based on the Toyota Production System.
Gembutsu – Japanese for ‘actual thing’ or ‘actual product’. The tools, materials, machines, parts and fixtures that are the focus of kaizen activity.
Genjitsu – Japanese for ‘the facts’ or ‘the reality’. The actual facts or the reality of what is happening on the shop floor and in the business.
Goal – Used synonymously with target. See target.
Green Belt – A person trained to work in support of Six Sigma initiatives on a part-time basis. They generally work part time as project team leaders on problems/opportunities that are small in scale than Black Belt projects.
Green Field – A new production facility where lean principles are designed into manufacturing and management systems from the beginning.
Hanedashi – Auto-eject devices that unload the part from the machine once the cycle is complete. This allows the operators to go from one machine to the next without waiting, picking up and loading parts. Hanedashi is a key component of chaku-chaku lines.
Heijunka – See Leveling. (also Workload Leveling)
Hidden Factory – All of the process rework and/or repair activities created to turn defective product or services in to 1st quality outputs.
Histogram – A graphic device that depicts variation in an observed measurement. A histogram shows the frequency of occurrence of different measurements for a given quality attribute. It is one of the seven basic process improvement tools.
Horizontal Handling – When tasks are assigned to a person in such a way that the focus in on maximizing a certain skill set or use of certain types equipment, this is called horizontal handling. Horizontal handling does not benefit flow. Contrast to vertical handling.
Hoshin Kanri – The Japanese term for management by policy. See also Hoshin Planning.
Hoshin Planning – A method of strategic decision making that focuses and aligns the organization on a few vital few “breakthrough” improvements. The objectives and means to achieve the objectives are cascaded down through the entire organization using a series of linked matrices. The process is self-correcting and encourages organizational learning and continuous improvement of the planning process itself.
Ijo-Kanri– See Abnormality Management.
Improvement – Statistically, it means to reduce variation due to common causes (that is, inherent variation of the process). There are two categories: (1) Kaizen – incremental improvements (that is, many, small, frequent, and continuous); and (2) Innovation – infrequent, major, large, and quantum-level improvements.
Incremental Cost – The additional cost from taking a particular action.
Indicator – A measurement.
Innovation – A category of improvement. See improvement.
Input – Materials, energy, or information used to produce a specified output (work product or service.)
Inspection at the Source – People performing an operation are accountable for the quality of their work and inspect their work. Contrasts with a traditional approach whereby another person inspects the work.
Integration – A frequently used term in the Malcolm Baldrige National Quality Award criteria. As such, it means compatible, complementary improvement efforts and cross-functional initiatives relative to a strategic quality plan. Integration is not a traditional financial plan with some quality-related objectives. It is a system for concurrent improvement and maintenance activities. It operates at a level where quality initiatives provide competitive advantage. Integration is consistent with a company’s mission and vision. It is streamlined so that the necessary workforce and budget follow from the quality improvement initiatives.
Intelligent Automation – See Autonomation.
Internal Failures – This is the cost of failures or problems that are discovered before products or services leave the company; for example, scrap and rework.
Internal Set-up – Set-up tasks that can only be done when the machine is stopped. Examples are changing the fixture, changing the tools, or making adjustments. After as many of the internal tasks have been externalized as is possible, the remaining internal changeover time is reduced through use of quick-change mechanisms.
Interrelationship Diagraph – Displays the relationships between factors in a complex situation. It is one of the new management planning tools.
Interview – An exchange of information utilizing face-to-face, or telephone communication.
Inventory – A major cost for most businesses, inventory is all raw materials, purchased parts, work-in-process components, and finished goods that are not yet sold to a customer. In some cases inventory may include consumable goods used in production.
Involvement – All employees are expected to have three jobs.
Jidoka – A Japanese term meaning a process designed to stop automatically when there is a problem. See Autonomation
JIT – See Just-in-Time Production.
Just-In-Time Production (JIT) – A production system to make what the customer needs when the customer needs it in the quantity the customer needs, using minimal resources of manpower, material, and machinery. The three elements to making Just-in-Time possible are takt time, flow production, and the pull system.
Kai-Aku – The opposite of kaizen. Change for the worse. Bad change.
Kaikaku – Radical improvements or reform that affects the future value stream. Often these are changes in business practices of business systems.
Kaizen – Commonly translated as “change for the better” or “improvement.” More accurately, it means to “break apart” (kai) and then “put back together to create a better state” (zen). It is based on a concept Shigeo Shingo espoused – hatred of the status quo and a willingness to break it apart and work to put it back together better. The philosophy is juxtaposed to the typical western philosophy of “if it ain’t broke, don’t fix it.” Kaizen is the philosophy underpinning continuous cost reduction, reducing quality problems, and delivery time reduction through rapid, team-based improvement activity.
Kanban – A Japanese word for ‘sign’. Kanbans are typically a re-order card or other method of triggering the pull system based on actual usage of material. Kanbans are attached to the actual product, at the point of use. Kanbans are cards have information about the parts (name, part number, quantity, source, destination, etc.) but carts, boxes, and electronic signals are also used. Squares painted on the floor to indicate storage or incoming areas are frequently, but mistakenly, referred to as kanbans.
Last-in First-out – The result of a typical material or information flow system without FIFO, resulting in earlier orders being perpetually delayed by new orders arriving on top of them. Also LIFO.
Lead Time – The time it takes to produce a single product, from the time of customer order entry to shipment.
Lean Enterprise – A Lean Enterprise is an organization that is engaged in the endless pursuit of waste elimination. A Lean Enterprise has a culture that does not tolerate waste of any kind.
Lean Manufacturing – A business practice characterized by the endless pursuit of waste elimination. A manufacturer that is lean uses the minimum amount of manpower, materials, money, machines, space etc. to get the job done on time.
Lean Transformation – Developing a culture that is intolerant to waste in all of its forms. A successful Lean Transformation should result in a Lean Enterprise, an organization that is engaged in the endless pursuit of waste elimination.
Leveling – Smoothing out the production schedule by averaging out both the volume and mix of products. Production leveling allows a consistent workflow, reducing the fluctuation of customer demand with the eventual goal of being able to produce any product any day. Leveling is the foundation of Gemba Production System.
LIFO – See Last-in First-out.
Line Graph – Charts the variation in data over time.
Links – Processes external to the process or sub-process being studied that either influence or are influenced by the process.
Machine Automatic Time – The time is takes for a machine to produce one unit, not including the manual time to load and unload.
Machine Cycle Time – The time it takes for a machine to produce one unit, including the manual time it takes to load and unload.
Machine Work – Work that is done by a machine. The time it takes to do machine work can overlap with manual work, if the machine is manually operated.
Maintenance – Relative to process improvement and control, it is synonymous with process control, that is, maintaining a process at its current standard.
Manage by Fact – Managing work by collecting objective data and making decisions based on this information (sometimes referred to as “speaking with facts”).
Management by Objectives (MBO) – Traditional western management approach whereby management specifies organizational objectives (usually financial results) and holds individuals accountable for their attainment without analysis or an understanding of the processes that produce the results.
Management By Policy (MBP) – One of three major components of the management system used by Japanese companies with mature TQ capability. Management by policy determines the key organizational objectives and means to obtain the objectives, deploys them throughout the entire organization, and makes regular reviews to ensure that the objectives are met and the means are followed. Also called policy management, policy deployment, hoshinkanri, and hoshin planning.
Management by Process – New management approach in which the focus is on improving the process with an eye on results.
Manual Work – Work that is done by people, without the aid of machinery. The human tasks of operating or loading machines can also be called manual work.
Marginal Cost – The cost of making one additional unit of production or service.
Master Black Belt – A full time person who’s responsible for teaching, mentoring and reviewing Black Belts as well as for managing large-scale improvement projects.
Materials Management – A systematic approach to managing material.Includes such functions as establishing minimum and maximum stocking quantities, warehousing practices, stores counts and transportation of materials.
Matrix Diagram– Shows the relationships among various data including the relative strength. IT is one of the seven new management tools.
MBO – See Management by Objectives.
MBP – See Management by Policy.
Measurement – The act of measuring in order to compare results to requirements.
Median – The middle value when figures are arranged according to size.
Mission – Why an enterprise exists; its raison d’etre and the scope of the business it’s in. For example, Exxon’s mission could be oil energy or a financial conglomerate.
Muda – Japanese for ‘waste’. Any activity that adds cost without adding value to the product.
Multi-Machine Handling – When a machine operator is running more than one machine of a certain type, this is called multi-machine handling.
Multi-Process Handling – When a machine operator is doing tasks for multiple processes sequentially, and this is contributing the flow of material, it is called multi-process handling.
Mura – Variations and variability in work method or the output of a process.
Muri – Exertion, overworking (a person or machine), unreasonableness. Culturally, in a lean environment, Muri is considered “dehumanizing work” and a violation of the fundamental principle of “respect for people.”
Nagara – Accomplishing more than one task in one motion or function. Japanese for ‘while doing something’. Also, work tasks performed concurrently instead of sequentially to eliminate overall cycle time.
Natural Variation – The random variation inherent in any process.
Need – A condition expressed by customers that must be satisfied; an expression of something necessary, desired or useful.
No Cause Found (NCF) – The code used when analysis is unable to determine the true cause.
Non Value-Added Work – Activities that may be necessary but do not add value as defined by the customer. Examples are packaging, paperwork, and inspection. Non value-added tasks can create value if their function is to identify and eliminate waste.
O & M – Abbreviation for Operating and Maintenance. Usually refers to a type of expenditure.
Objective –Specifically refers to a desired result. In the context of MBP, a policy is comprised of both an objective and the means to accomplish the objective.
OEE – Short for Overall Equipment Effectiveness, OEE is calculated based on Availability x Performance x Quality to determine how much of the time a piece of equipment is being used it is actually making good parts at an appropriate speed. OEE is one of the 5 pillars of TPM. Click here for more on OEE.
One-Piece Flow – One-piece flow production is when parts are made one at a time and passed on to the next process. Among the benefits of one-piece flow are 1) the quick detection of defects to prevent a large batch of defects, 2) short lead-times of production, 3) reduced material and inventory costs, and 4) design of equipment and workstations of minimal size.
Open Room Effect – This common practice in Japanese offices involves taking down the walls and cubicles of an office and laying all of the desks out into one big ‘open room’. This saves space and improves communication between those performing related tasks and creates a sense of teamwork.
Operating Philosophy – A statement of fundamental values, beliefs, assumptions, credo, philosophy and principles.
Operator Cycle Time – The time it takes for a worker or machine operator to complete a sequence of operations, including loading and unloading, but not including waiting time.
Outcome – The results achieved by using the product process or service.
Outgoing – The end result of a set of activities or work process.
Pacemaker – A device or technique use to set the pace of production and maintain takt time.
Pareto Analysis – The study of related subjects to determine if one is more significant than the others.
Pareto Chart – A problem solving tool in the form of a vertical multi-bar graph with the bars in descending order of significance from left to right. A Pareto Chart focuses improvement activity on the “vital few” and not the trivial many. The 80/20 rules comes from the Pareto Principle, stating that 20% of the items account for 80% of the activity (problems, sales, defects, etc.).
Payback Period – The length of time until an investment has returned its initial investment.
PDCA – ‘Plan-Do-Check-Act’. This is a basic principle followed for effective problem solving during kaizen.
PDPC – See process decision program chart.
Peak Load – The maximum amount of product or service required by consumers during a particular period.
Peak Period(s) – Those times, usually weekdays, when customer demand for electricity is greatest. FPL’s daily peak periods during winter months occur between 6 a.m. – 11 a.m. and between 5 p.m. – 10 p.m. Daily peak in the summer is between 12 – 10 p.m. Peak periods are utility-specific since they vary from utility to utility.
Performance Management – Using a set of tools and approaches to measure, improve, monitor and sustain the key indicators of a business.
Performance Measure – Measurement of actual accomplishment compared to what was planned.
Plan – What to do.
Plan-do-check-act (PDCA) Cycle – Also called the Deming cycle or Shewhart (original developer) cycle. It is the application of the scientific method to process control and improvement. Essentially, it means to analyze a situation or process; decide on an alternative and plan its implementation; implement the alternative; determine whether it worked; if so, institutionalize it, if not, discard it and try again. Recently, Dr. Deming refers to this cycle as the plan-do-study-act cycle.
Point of Use Storage (POUS) – Keeping all items needed for the job at the location of use in a neat and organized manner. POUS is on of the goals of 5S activity.
Poka-Yoke – Japanese for ‘mistake-proofing’. Mistake-proofing is achieved by designing parts, processes or procedures in a way that makes mistakes physically or procedurally impossible. The term Poka-Yoke was adopted in Japan as a less offensive version of the term Baka-Yoke, which literally means “fool-proof” or “idiot-proof.”
Policy Deployment – See Hoshin Planning.
Policy Management – See management by policy.
Policy – In management by policy and in the Deming Prize checklist, policy means the overarching or key objectives for the organization and the means by which the objectives are obtained.
PON – See Price of Non-conformance.
Population – A statistical term used to describe the whole range of possibilities from which a measurement could be taken.
Present Value – Value at the beginning of a time frame.
Preventable Occurrences – Full or partial failures that could have been prevented by better management action.
Prevention – A quality improvement method that uses analysis and process changes to reduce waste, delays and defects.This is the cost associated with any activity whose purpose is to prevent bad quality; for example, training or process improvement teams.
Prevention-Based Process/System to Ensure Quality – Can be contrasted to a system based upon inspection, which is reactive. A prevention-based system identifies those upstream activities that, if done, ensure that the results will be satisfactory. A prevention-based system is proactive.
Price of Non-conformance (PON) – See cost of quality.
Prioritization Matrices – Used to determine the highest-priority options or alternatives relative to accomplishing an objective. IT is one of the seven new planning tools.
Problem – A gap between what the customer desires and what currently exists.
Problem Statement – A brief description of a condition that needs to change.
Problem-Solving Tools – The seven basic process improvement tools.
Process – All of the activities, people, machines, information, material, measurements, and methods required to accomplish a task.
Process Boundary – The line separating a process from other business activities.
Process Capability –The inherent variation of a process relative to the variation that is acceptable to the customer. That is, if the inherent variation is very small relative to the customer needs and the process is centered at or near the target, then the process is said to be highly capable.
Process Capacity Table – A chart primarily used in machining processes that compares set-up and machine load times to available capacity. Also Table of Production Capacity by Process.
Process Decision Program Chart (PDPC) – Identifies all events that can go wrong and the appropriate countermeasures for these events.
Process Improvement – Activities applied to detect and remove the causes of process variation.
Process Mapping – A tool that provides a graphic representation of the sequence of steps performed to produce an output (product or service).
Process Owner – The person or persons responsible for assuring that a process meets customer requirements.
Process Quality Indicator – Measures the degree and/or frequency of conformance to process valid requirements. They can provide early indication that the desired outcome will or will not be achieved.
Process Redesign – Actions taken to improve the efficiency or capability of a process to meet customer requirements.
Producer Price Index (PPI) – A U.S. Government Index that measures the change in wholesale prices by using a previous time period as a reference or index.
Production Preparation Process – See 3P.
Production Smoothing – See leveling.
Pull Production System – A production approach whereby material isn’t moved or produced until a signal is received from the customer operation. It contrasts with a traditional push system whereby material is produced to a centrally developed schedule (such as material requirements planning) and pushed to the next operation or the stockroom whether or not the customer operation needs it.
Pull System – One of the 3 Elements of JIT. The pull system enables the production of what is needed, based on a signal of what has just been sold. The downstream process takes the product they need and ‘pulls’ it from the producer. This ‘customer pull’ is a signal to the producer that the product is sold. The pull system links accurate information with the process to minimize overproduction.
Purchase Order – Contractual document with a contractor or supplier of material and/or services.
Push System – In contrast to the pull system, product is pushed into a process, regardless of whether it is needed right now. The pushed product goes into inventory, and lacking a pull signal from the customer indicating that it has been bought, more of the same product could be overproduced and put in inventory.
QCD (Quality, Cost, and Delivery) – Also the 3 Elements of Quality, Cost, and Delivery are the key customer satisfaction metrics that determine if a company is competitive. Kaizen activity focuses on improving QCD metrics.
QCDSM (Quality, Cost, Delivery – Safety & Morale) – A set of performance management measures that includes employee satisfaction (safety & morale) as well as customer satisfaction. Lean Transformation aims to eliminate waste, improve QCDSM metrics, and increase profitability.
Quality Circles – Natural work units that meet regularly to improve quality. Typically, quality circle members are volunteers. The circle usually determines what it is going to address. Quality circles contrast with process improvement teams, which are typically multifunctional and work on issues that are specified by management.
Quality Control – The ability to evaluate actual operating performance, compare actual performance to a target, and act on the difference.
Quality Elements – The translation of the customer’s voice into variables the company can measure and control in order to meet customer needs and reasonable expectations.
Quality Function Deployment (QFD) – A process to understand the voice (expectations) of the customer and to translate the customer’s voice into technical design parameters (substitute quality characteristics), subsystems, parts, components, processes, and process controls.
Quality Improvement Teams (QI Teams) – Employee teams formed to solve problems and to improve the quality of products and services. There are two types of teams: Functional and Task.
Quality in Daily Work – A process used to maintain and improve daily control of work activities.
Quality of Conformance to Design – The degree to which the delivered product or service quality reflects the intended quality of design.
Quality of Design – The degree to which the intended product or service design satisfies the customer’s needs for a designated market area.
Quality – Good quality results from the customer’s perception that expectations have been met or exceeded. With respect to customer satisfaction, perception is reality. Customers are both internal and external to the business. External customers include the ultimate end users and hierarchy of companies between the company and end users.
Radar Chart – Graphically depicts the relative strengths or weaknesses of various attributes in an activity.
Range – The difference between the maximum and the minimum value of data in a sample.
Reliability – How well a product or process performs under specified conditions, without failure, for a given period of time.
Rework – A quality assurance method that focuses on improving rejects at the end of a process (inspection) with the goal of delivering only acceptable products and services to the customer.
Robust Design – A design that is relatively insensitive to the variation in customer usage, production processes, material and components.
Root Cause – The most basic underlying reason for an event or condition. The root cause is where action must be taken to prevent recurrence.
Run Chart – Plots data over time (for example sales per month). It is one of the seven basic process improvement tools.
Sample – A measurable number of items taken from a population.
Scatter Diagram –Depicts the relationship between variables, thereby helping to substantiate whether or not a potential root cause is related to the effect. It is one of the seven basic process improvement tools.
Sequential Changeover – Also sequential set-up. In a flow process, when changeover times are within Takt Time, changeovers can be performed one after another. Sequential changeover assures that the lost time for each process in the line is minimized to one ‘Takt’ beat. A set-up team or expert follows the operator, so that by the time the operator has made one round of the flow line (at Takt time), it has been completely changed over to the next product.
Sequential Set-Up – See sequential changeover.
Set-Up Reduction – Reducing the amount of time a machine or a process is down during changeover from the last good piece to the first good piece of the next product.
Seven New Planning Tools for Management – Affinity Diagram, Interrelationship Diagraph, Tree Diagram, Matrix Diagram, Prioritization Matrices, Process decision Program Chart (PDPC), Arrow Diagram.
Shareholder Value – The total value of the common stock of a company, measured by the price at which the stock could be sold.
Shewhart Cycle – Also known as the Deming Cycle or the Plan-Do-Check-Act Cycle. See Plan-Do-Check-Act Cycle.
Short Set-Up Times (less than ten minutes) – which allow small lot sizes and short lead times.
Short-Term Plan (STP) – One-year plan developed to address a high priority corporate problem.
Sigma –A measure of the variation around the average of any process. Also known as 1 standard deviation, 1s represents 34.134% of your data points.
Single Minute Exchange of Dies (SMED) – A system of set-up reduction and quick changeover pioneered and developed by Shigeo Shingo.
Six Sigma – A process quality measure indicating that there are 6 standard deviations between the process average and EACH (lower & upper) specification limit. The methodology and set of tools is used to improve quality to 3.4 or fewer defects per million.
Special Cause Variation – A source of variation in the output of a process that is unpredictable, unstable, or does not occur very often (also called “assignable” cause).
Specification – A description of the requirements to which a product or service must conform.
SQC – Abbreviation for Statistical Quality Control.
Stakeholders – Persons and organizations affected by the actions of a business.
Standard Deviation – Calculated boundaries that describe how data is dispersed around its median.
Standard Work Combination Sheet – A document detailing the sequence of production steps assigned to a single worker performing Standard Work. This document outlines the best combination of worker and machine. Also SWCS.
Standard Work in Process – Also Standard WIP, or SWIP. The minimum work-in-process needed to maintain standard work. Standard WIP parts are 1) parts completed and in the machine after auto cycle, 2) parts placed in equipment with cycle times exceeding Takt time, and 3) the parts currently being worked on or handled by the operators performing standard work.
Standard Work Sheet – A visual work instruction drawing for Standard Work.Shows the work sequence, takt time, standard working process, and layout of the cell or workstation. Also SWS.
Standard Work – Standard Work is the most efficient combination of man, machine, and material. The three elements of standard work are 1) takt time, 2) work sequence, and 3) standard work-in-process. Performing standard work allows for a clear and visible ‘standard’ operation. Deviation from standard work indicates an abnormality, which is then an opportunity for improvement.
Standard – The current best practice for an activity or process – literally the best known way to complete the work.
Standardization – The process by which all persons follow the current standard. Management’s job is to ensure standardization. When a process is improved, doing all of the things required to ensure that the improvement is institutionalized (that is, used pervasively in the company), and that the gains are sustained. Standardization means the same as maintenance.
Standardize – Assuring that a process will be performed in the same manner each time.
Standardize-Do-Check-Act (SDCA) – A variation of the PDCA cycle, whereby the P step entails planning to replicate a process standard throughout an organization.
Statistical Process Control – Using a statistical control chart to monitor a process to determine the nature of its variation. Based upon the nature of variation, a decision is made to leave the process alone or to take appropriate action. Any actions will utilize the quality improvement process.
Statistical Thinking – This is the means to understand variation in all processes and the implications of the nature of variations. Dealing with special causes of variation requires one strategy, whereas common causes require another strategy.
Steering Committees –Management Teams that provide direction, allocate resources, monitor progress, and support for the achievement of SP’s goals objectives.
Steps – The sequential order of activities performed.
Stop-the-Line Authority – When workers are able stop the line to indicate a problem, this is stop-the-line authority. The production line or machine remains stopped until the supervisor, manager, engineer, maintenance personnel, support staff or president have identified the problem and taken corrective action.
Storyboarding – The process of documenting the application of the DMAIC to a specific area or process. Ideally, the DMAIC will be displayed prominently on a board or wall to make it as visible as possible. The term originated with Walt Disney, who used to display ideas and issues prominently to enhance communication and to make it easy for people to contribute ideas.
STP – See Short-Term Plan.
Strategic Planning – Developing short and long-term competitive strategies using tools such as SWOT Analysis to assess the current situation, develop missions and goals, and create an implementation plan.
Stratification – Breaking down the whole into smaller related parts. For example, age, sex, occupation, race, ethnic group, and so on can stratify data about the U.S. population. Stratification is vital in data analysis because significant differences can exist within isolated parts of the whole.
Stratify – Break down into component parts.
Suggestion System – In a suggestion system workers are encouraged to identify wastes, safety, and environmental concerns and submit improvement ideas formally. Rewards are given for suggestions resulting in cost savings. These rewards are typically shared among the production line or by the kaizen team.
Sunk Cost – Any expenditure that has already taken place and can not be undone. Decisions should not be made based on sunk costs.
Supermarket – The supermarket is a tool of the pull system that helps signal demand for the product. In a supermarket, a fixed amount of raw material, work in process, or finished material is kept as a buffer to schedule variability or an incapable process. A supermarket is typically located at the end of a production line (or the entrance of a u-shaped flow line).
Supplier – Contractor or vendor of material and/or services.
Surge – An abnormal rush of demand.
Survey – A means of gathering information with questionnaires.
SWCS – See Standard Work Combination Sheet.
SWS – See Standard Work Sheet.
System – A group of processes that together accomplish a specific purpose.
Table of Production Capacity By Process – See Process Capacity Table.
Table of Tables – A tool used to incorporate the customers’ voice into the decision-making processes of the company. The Table helps to identify those items (functions) on which require focus in order to maximize and maintain customer satisfaction.
Takt Time – Takt time is the pace at which the customer is buying a particular product or service. Takt time is the total net daily operating time divided by the total daily customer demand. Takt time is not how long it takes to perform a task. Takt time cannot be reduced or increased except by changes in production demand or available time to work. Takt time is one of the 3 Elements of JIT. Takt is a German word for ‘beat’ or ‘rhythm’.
Target Costing – A way of establishing a cost goal for a product or service in the design phase. Target costing follows this formula – Sales price – Target Profit = Target Cost.
Target – A specific end result by a given time. Comparing target with objective: an objective is to improve billing accuracy, and a target is to reduce errors to .01% by December 1993.
Task Teams – QI Teams appointed to work on a specific process/problem.
Tebanare – Japanese for ‘hands-free’. The goal of tebanare is to use low cost automation on manual machines to allow people to do work that is more valuable that only a person can do.
Throughput – The rate at which the entire system generates money.
Time-Based Strategy – Driving improvement activity through focus on time and its relation to quality, cost, delivery, safety, and morale.Reduction in lead-time, set-up time, cycle time as a means of becoming more competitive.
Total Cost – The sum of the costs of making each unit of production or service.
Total Productive Maintenance (TPM) – A continuous improvement approach that is focused on equipment. Its aim is zero breakdowns through improved process capability and reliability. Involving equipment operators in the maintenance process and continuously upgrading their capability to do more complex maintenance is a fundamental component of this improvement approach.
Total Quality (TQ) – Sometimes referred to as total quality management (TQM). An organizational philosophy committed to meeting or exceeding customer’s needs through continuous improvement of business processes resulting from the continuous development of people’s capabilities.
Toyota Production System (TPS) – A methodology that resulted from over 50 years of Kaizen at Toyota, one of the most successful companies in the world. TPS is built on a foundation of Leveling, with the supporting pillars of Just-in-Time and Jidoka. See also Gemba Production System.
TPM – See Total Productive Maintenance.
TQM – See total quality.
Tree Diagram – Shows the complete range of subtasks required to achieve an objective. It is one of the seven new management tools.
Tsurube System – A way to keep product flow continuous even when there are interruptions such as outside processing or batch operations. The tsurube system is often used when product leaves the flow line for processing through equipment that can not be placed into the cell (vendor operations, heat treat, plating, anodizing, etc.). Also called the “Well Wheel System” because of the similarity to how water is drawn out of a well using two buckets and a pulley wheel.
Two-Bin System – An example of both visual management and the pull system, whereby two bins or containers are used trigger reorder of parts or materials. Each bin contains enough parts to last during the delivery lead-time. When one bin is empty, it is time to reorder the two-bin quantity.
U Chart – Count per unit chart.
Upper Control Limit (UCL) – control limit for points above the central line in a control chart.
Value Stream Mapping – Creating a visual picture of the ‘Current State’ or how material and information flows from suppliers through manufacturing and to the customer. Total lead-time, process cycle times and value-added times are measured. The Future State is created based on goals desired based on market conditions and strategic planning for the business.
Value-Added Time (VAT) – Time consumed or expended in performing work, usually measured in minutes. For many business processes, VAT accounts for less than 10 % of the process cycle time.
Value-Added Work – Work that the customer is willing to pay for. A transformation of the shape or function of the material/information in a way that the customer will pay for.
Variable Cost – A cost that changes with changes in sales or production.
Variable – A factor that when counted (discrete data), or measured (continuous data), can take on different numeric values.
Variance – Any non-conformance to specifications.
Vertical Handling – When tasks are assigned in such a way that the materials processes are being progressively worked towards completion, this is vertical handling. This in contrast to horizontal handling which only focuses on the output of a specific process.
Vision – A picture of the future state of the business in five, ten, or 20 years. Such a vision provides direction for strategic planning, the purpose of which is to attain the vision. An example of a vision statement is to be the recognized world leader in financial services.
Visual Controls – Various tools of visual management such as color-coding, charts, andons, schedule boards, labels and markings on the floor.
Visual Management – When the normal state and abnormal state can be clearly and visually defined, visual management is possible. In visual management, simple visual tools are used to identify the target state, and any deviance is met with corrective action.
Voice of the Customer (VOC) – Expectations of the product, as stated by the customer. These expectations may be expressed in subjective terms that may not be directly measurable by objective criteria.
Waste – See Muda.
Waterspider – The waterspider is a skilled and well-trained person who makes the rounds supplying parts, assisting with changeover, providing tools and materials, and any additional help needed to maintain Standard Work and keep the flow going. The waterspider has a routine and knows all processes thoroughly enough to step in if needed. At Toyota, performing the waterspider role is a prerequisite for supervision and management positions. Named after the whirligig beetle that swims about quickly in the water.
Well Wheel System – See Tsurube System.
Work Order – The drawings and instructions issued to a construction or maintenance crew describing the work to be performed.
Work Process – A series of work activities intended to produce a specific output.
Work Sequence – The defined steps and activities that need to be performed in order for the work to be completed.
Workplace Organization – Which means having a place for everything and everything in its place, clean and ready for use.
Yield – The basic metric of process quality that measures the proportion of 1st Quality product or service produced.
Zero Defects – A performance standard developed by Philip B. Crosby to address a dual attitude in the workplace: people are willing to accept imperfection in some areas, while, in other areas; they expect the number of defects to be zero. This dual attitude had developed because of the conditioning that people are human and humans make mistakes. However, the zero defects methodology states that, if people commit themselves to watching details and avoiding errors, they can move closer