~ LEAN GOALS ~

The most common mistake when entering a Lean Transformation initiative is not setting the goals high enough.  We are not looking for single digit percent improvements.  The following short list gives you an idea about what lean goals should look like.

Reducing Manufacturing Lead Time
In most non-lean factories, Value Added (VA) time is measured in minutes, while Non-Value Added time is measured in hours.  Because most of the manufacturing lead time is wasted as non-value added (NVA) time, it is often possible to reduce manufacturing lead time by as much as 50% to 90%.  For example, an 8 day process with 12 manufacturing process steps can be cut down to less than one day manufacturing lead time.

Increasing Capacity
Because there is so much waste in a non-Lean enterprise, it is often possible to double the output of a factory without increasing plant floor area and without adding labor.  Usually, modest capital investments are needed to acquire work flow carts, bins, flow racks and other tools of the Visual Factory.

Liberating Working Capital
In every enterprise, working capital is tied up in labor and materials that must be purchased and converted into product, well before the revenue is received.  In a non-lean enterprise, Work-in-Process (WIP) and Finished Goods (FG) inventories can be 10 times, or even 100 times as big as would be needed in a lean operation.  The yield is often more than 10 times the cost of a lean initiative.  This is why a lean transformation should be viewed as an investment that generates a return.

• Reducing WIP. Smaller quantities more often. Reducing the batch size, often by a factor of 10 or more, will reduce WIP by a proportional amount. The more process steps and the more lines, the bigger the savings. WIP reduction produces a one-time liberation of working capital, but will produce annual savings from factory floor space savings, reduction in WIP tracking costs, and reduction in material handling costs.
• Reducing FG. Once Lean methods have been fully implemented in a Visual Factory with a pull system, it is sometimes possible to change the entire operational model from a Make-to-Stock (MTS) operation to a Make-to-Order (MTO) operation. If such a conversion is possible, then a huge reduction in inventory will yield a one-time liberation of working capital, but will produce annual savings from factory floor space savings, reduction in WIP tracking costs, and reduction in material handling costs. Only a full analysis and Value Stream Mapping will show what is possible.

Reducing Labor
In a non-Lean enterprise, at least 30% of the factory floor labor is wasted, and as much as 60% of the office labor is wasted.  Ideally, in the Lean Enterprise labor that is freed up is redeployed into new initiatives.  However, if the company is facing reduced revenue, then a reduction in force (RIF) is in order.

Improving Quality
Improved quality is a natural outcome of a lean process.  It begins with the personal mantra adopted by every employee in the Lean Enterprise: “I will not accept defects, I will not produce defects, and I will not pass defects to others.”  This makes every person responsible for quality.

Employee Empowerment
In a Lean environment, workers take pride in their work and take personal accountability to produce good product and to find and eliminate lean.