Lean is a management methodology that seeks to maximise customer value by giving the customer the product or service they want in the most efficient (least wasteful) manner. The key in the title is “toolbox”; this book is not a primer but a summary of the latest thinking in the Lean methodology.
History of Lean
The book starts with a brief history of Lean from its roots with Deming and Ford, through the ground-breaking work of Ohno (in developing the Toyota Production System) to its renaissance in the West through the work of Womak and Jones and others.
The word “new” in the title refers to recent refinements in Lean methodology thinking, incorporating ideas from such approaches as Six Sigma, Enterprise Resource Planning and Time-based Completion, amongst others. The last-named, which advocates reduction in lead-time (a central tenet of Lean), brings some provoking statistics to play, namely:
- The 0.05-to-5 rule, which states that between only 0.05% and 5% of activities add customer value – a rule that this reviewer can personally verify, especially in service industries;
- The 3/3 rule, which states that time spent on non-value-added activities is split equally, three ways, between waiting for completion of production, waiting for rework and waiting for management decisions;
- The ¼-2-20 rule, which states that for every quartering of completion time, productivity is doubled along with a cost reduction of 20%;
- The 3×2 rule, which states that companies that adopt this approach enjoy three times the average growth rates and twice the profit margin, compared to their competitors.
The book continues with a brief summary of five principles of Lean:
- Specify what constitutes value from a customer’s viewpoint;
- Identify the value stream – which parts of the business add value and which parts do not (i.e. which parts are waste);
- Make the value flow – seek to remove the non-value-added parts of the business;
- Ensure that the demand is pulled – driven by the customer’s demand, rather than stockpiling according to supply;
- Seek to perfect the process by iteration.
In addition, there is a summary of the seven wastes that Lean aims to remove:
- Delay on the part of customers waiting for a delivery;
- Duplication – re-entering data or having to repeat the same details to several different people in one transaction;
- Un-necessary movement or queuing;
- Unclear communication;
- Incorrect inventory, ie unable to deliver what was required and substitute products or services being sub-standard;
- Lost opportunity to retain or win customers;
- Errors in the service delivered through products being defective or lost.
Note that the wastes listed above are biased toward service industries – the author also provides a list of seven manufacturing wastes. Interestingly, in the spirit of “new” Lean, he also specifies some “new” wastes, such as wastes of:
- energy and water;
- untapped human potential;
- inappropriate systems, either paper-based or automated.
This last waste will resonate with those who have worked on IT-automation projects where an inappropriate IT package has been shoe-horned into the business, leaving inefficient manual processes untouched while large swathes of the IT package remain unused or unusable.
The bulk of the book consists of a list of tools based around the author’s framework, targeted at experienced Lean practitioners. The author explains that he does not expect all the tools to be used on all engagements; rather it is up to the reader to use their experience to select the best tools for a particular problem. Bicheno also stresses that the Lean process is continuous, iterative process.
Bicheno’s framework consists of following sections:
- Understanding Lean principles;
- Understanding customers;
- Strategy, planning and communication;
- Understanding the system and mapping;
- Product rationalisation and design;
- Implementing the foundation stones;
- The value-stream implementation cycle;
- Building a Lean culture;
- Working Lean supply;
- Working Lean distribution;
- Costing and measuring;
- Improving and sustaining.
The section involving Strategy is especially interesting as the author is clearly familiar with executive-level business theories that define and improve value.
He advocates Kano analysis as the most powerful technique in for developing products; he has a good section on Scenarios (although his failure to extend this to mention assumption-based planning is little surprising); he outlines how Lean techniques are complementary with Kaplan and Norton’s Balanced Scorecard and credits Jim Collins as succinctly defining the primary characteristics of people management.
One of the key parts of Lean is to determine which parts of the business add value and which parts do not – the value-stream. In the section dealing with this, Bicheno gives detailed advice on the tools to do this; here there is overlap with business process modelling.
As an aside, the image shows a value-stream mapping workshop in progress. I am facilitating, seated in the foreground. Having set the objectives for the session, I have let the remaining participants take the lead in re-designing their own processes with the aim of eliminating waste activities.
Returning to Bicheno, under the Costing section, he makes a plea for simplified accounting practises, naming conventional activity-based accounting as too bureaucratic – perhaps this is part of a trend to simpler mechanism?
This is a hugely comprehensive book summarising the latest thinking in Lean. It is biased towards manufacturing – not surprising, as Lean practitioners have only recently turned their attention to the service sector.
As so much material is packed in, some of the text is succinct – to the point of terseness at times; no matter, every experienced practitioner will want a copy close to hand.
“Value Stream Management”: Eight Steps to Planning, Mapping and Sustaining Lean Improvements” by Dan Tapping. Less-experienced practitioners may want to read this in parallel with Bicheno.
“Lean Software Development” by Mary and Tom Poppendieck. Traces the connection between Lean thinking and Agile software development. The authors have feet in both camps having written software for concurrent-engineering and supply-chain enterprises.
At Agilier, we have had tried-and-tested experience using some of the techniques outlined with special modifications, where appropriate, for application in service industries. This has resulted in both reduced costs and increased capacity for our clients. Please contact us for a no-obligation discussion.