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THIS IS LEAN

Niklas Modig
Stockholm School of Economics

@LeanOnMyself
www.facebook.com/niklasmodig
@niklas_modig
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What is lean?
Way of working Production system
Philosophy Strategy
Approach to improvement Eliminating waste
Approach System for understanding
Systems thinking Mind-set
Culture Values
Quality system Management system
Way of life Tool box
Method

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Fruit

High level
of abstraction

Pear Apple

Whole Piece Low level Green Red


of abstraction

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Three central choices

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Alison thinks she has cancer

Local doctors Mammography Breast clinic Cytology Breast clinic


surgery & ultrasound

WaiCng WaiCng WaiCng WaiCng

42 days
First Diagnosis
contact

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Sarah feels a lump in her breast

One stop breast clinic

First
Diagnos
Diagnosis
contact

2h

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Any difference?

42 days 24h =1008h 2h

500 $mes
faster
WHY?
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Two different views on efficiency

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RESOURCE EFFICIENCY FOCUS: RESOURCE

Local doctors Mammography Breast clinic Cytology Breast clinic


surgery & ultrasound

Waiting Waiting Waiting Waiting

42 days
First Diagnosis
contact

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RESOURCE EFFICIENCY FOCUS: RESOURCE

Filming the source

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FLOW EFFICIENCY FOCUS: FLOW UNIT

Local doctors Mammography Breast clinic Cytology Breast clinic


surgery & ultrasound

Waiting Waiting Waiting Waiting

42 days
First Diagnosis
contact

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FLOW EFFICIENCY FOCUS: FLOW UNIT

Filming the receiver

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Two different strategies

Resource eciency Flow eciency


Focus Resources / funcCons Customer / unit
Goal High capacity uClizaCon Full needs
OrganizaCon Parts / Islands System / Ocean
Competence Specialists / depth MulC-competence / Width

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What shall we prioritize first?
RESOURCE EFFICIENCY FLOW EFFICIENCY

LONG THROUGH-PUT TIME SHORT THROUGH-PUT TIME

HIGH WASTE LOW


CAPACITY CAPACITY
UTILIZATION UTILIZATION

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Resource
eciency

Flow
eciency
WHY?

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Maximize Maximize Maximize Maximize Maximize
capacity capacity capacity capacity capacity
utilization utilization utilization utilization utilization

Local doctors Mammography Breast clinic Cytology Breast clinic


surgery & ultrasound

Waiting Waiting Waiting Waiting

42 days
First What happens when a system is busy? Diagnosis
contact A diagnose will take long time
We have to handle many patients at the same time
We have to restart the diagnose many times

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THE OPTIMAL PROCESS

Resource
Flow efficiency
efficiency
100%
Free 100%
Free 100%
Free 100%
Free
utilization
capacity utilization
capacity utilization
capacity utilization
capacity

1 2 3 4

What happens when a system is busy?


Things will take long time
We have to handle many things at the same time
We have to restart the value adding process many times

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Different indirect effects
Resource eciency Flow eciency
Focus Resources / funcCons Customer / unit
Goal High capacity uClizaCon Full needs
OrganizaCon Parts / Islands System / Ocean
Competence Specialists / depth MulC-competence / Width

Resource eciency Flow eciency


Through-put Cme Long Short
Number of units Many Few
Restarts Many Few

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Resource efficiency drives system waste
NegaCve result
Resource eciency
Resource eciency
Focus Resources / funcCons
Focus Resources / funcCons
Goal High capacity uClizaCon UnsaCsed customers
Goal High capacity uClizaCon UnsaCsed personnel
OrganizaCon Parts / Islands
OrganizaCon Parts / Islands Waste
Competence Specialists / depth

Resource eciency Failure demand


Through-put Cme Long Forget, frustraCon, rework, search
Number of units Many Dicult to handle, Under-capacity...
Restarts Many Quality problems, no system responsib

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Three sources of inefficiency
Secondary
need

Secondary
need
Long Secondary Secondary
throughput need need
time
Secondary
Secondary need
need Secondary
need

Over-focus on
resource
Secondary
need efficiency
Secondary
Many need
Many
restarts flow units

Secondary
need Secondary
Secondary
need
need

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The efficiency paradox
By NOT focusing on maximizing capacity utilization, MORE capacity will be available

Superuous work
Total (Secondary need)
capacity
(100%)

Value-added Value-added
work work
(Primary need) (Primary need)

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The efficiency matrix

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The efficiency matrix

High
Resource eciency
Low

Low High
Flow eciency

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The efficiency matrix

High

Strategy to increase resource eciency


Resource eciency
Low

Low High
Flow eciency

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The efficiency matrix

High
Resource eciency
Low

Strategy to increase ow eciency

Low High
Flow eciency

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This is lean = an operations strategy

High
Resource eciency
Low

Low High
Flow eciency

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Resource
eciency

Flow
eciency

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How to do the how?

High
Resource eciency
Low

Current How? Future


state state

Low High
Flow eciency

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?
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Just-in-time and Jidoka
Perfect understanding of:
The process / the system 89:30
+ / - 5 SCORE 1
Progress

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Welcome to
Stockholm School of Economics!

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How can we develop operaCons where everyone sees
everything and has perfect progress control all the Cme?

ONE CLICK AWAY ONE LOOK AWAY



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Monitor the
Resource outcome from
eciency my island

Monitor the
Flow
progress of the
eciency
system

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When is an organisation lean?

High
Resource eciency
Low

Low High
Flow eciency

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+

time
1 2

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+

How?

time
1 2

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PROACTION ACTION REACTION

0 1 2 3 4 5 6

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PROACTION ACTION REACTION

NORMAL FLOW

1 2 3 4 5

0 6

1. SET

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PROACTION ACTION REACTION

NORMAL FLOW

1 2 3 4 5

0 1 2 3 4 5 6

1. SET 2. TEST

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PROACTION ACTION REACTION

NORMAL FLOW

1 2 3 4 5

0 1 2 3 4 5 6

1. SET 2. TEST 3. EVALUATE

A B

DEVIATION DEVIATION

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PROACTION ACTION REACTION

NORMAL FLOW

1 2 3 4 5 + DEVIATION

0 1 2 3 4 5 6 X NORMAL OUTCOME

1. SET 2. TEST 3. EVALUATE X


DEVIATION

-
A B

DEVIATION DEVIATION

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PROACTION ACTION REACTION

NORMAL FLOW

1 2 3 4 5 + DEVIATION
WHY?

0 1 2 3 4 5 6 X NORMAL OUTCOME

1. SET 2. TEST 3. EVALUATE X


4. ANALYZE DEVIATION

- WHY?

A B

DEVIATION DEVIATION
WHY? WHY?

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PROACTION ACTION REACTION

NORMAL FLOW

1 2 3 4 5 + DEVIATION
WHY?
AHA!
X

0 1 2 3 4 5 6 X NORMAL OUTCOME

1. SET 2. TEST 3. EVALUATE X


4. ANALYZE DEVIATION

-
5. LEARN WHY?
AHA!

A B

DEVIATION DEVIATION
WHY? WHY?
AHA! AHA!

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PROACTION ACTION REACTION

NORMAL FLOW

1 2 3 4 5 + DEVIATION
WHY?
AHA!
X

0 1 2 3 4 5 6 X NORMAL OUTCOME

1. SET 2. TEST 3. EVALUATE X


4. ANALYZE DEVIATION

-
5. LEARN WHY?
6. IMPROVE AHA!

A B

DEVIATION DEVIATION
WHY? WHY?
AHA! AHA!
CHANGE

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PROACTION ACTION REACTION

NORMAL FLOW

1 2 3 4 5 + DEVIATION
WHY?
AHA!
X

0 1 2 3 4 5 6 X NORMAL OUTCOME

1. SET 2. TEST 3. EVALUATE X


4. ANALYZE DEVIATION

-
5. LEARN WHY?
6. IMPROVE AHA!

A B

DEVIATION DEVIATION
WHY? WHY?
AHA! AHA!
CHANGE

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THE
LEARNING
LOOP

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The learning Dynamiskt
organisation
ml
(kontinuerlig frbttring)
Flow eciency
Fldeseffektivitet
(%)

A Dynamiskt
dynamic ml
state
con$nuous evolu$on
(utvecklas hela tiden)

Utgngspunkt
Current state

Time
Tid

Utgngspunkt
Current state
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Monitor the
Resource outcome from ReacCve
eciency my island execuCon

Monitor the ProacCve


Flow
progress of the learning
eciency
system

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THANK YOU!

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