Starting the Journey of Waste Reduction

Lean Means Eliminating Waste

Getting “lean” has become a corporate buzzword. A corporate executive hearing about the success of his competitors with a lean program might say to a subordinate, “We must get lean to survive in this competitive market. Go take a course and get certified on this lean stuff and come back and do it.” If only it were so easy. The subordinate, often a middle manager or engineer, goes through the certification course, starts to sort out the bewildering array of terms like “kanban,” “andon,” “jidoka,” “heijunka,” “takt time,” and on and on, and comes back charged up and overwhelmed. “Where do I start?” he asks. “Our processes don’t look like the case examples they used in class.”

Unfortunately, every process is different, and simply learning a template for setting up a kanban system or building a cell may not transfer in a straightforward way to your operation. Quite possibly a tool used by Toyota, as they use it, may not even make sense in your environment. This leads many people to conclude that “lean does not work here.”

When we hear this, we ask our students or clients to step back a bit. We might both agree that building a supermarket and using kanban is not the solution. But do not give up just yet. Let’s go back to first principles. The starting point on creating a lean flow for us is Taiichi Ohno’s description, in 1988, of what he was trying to accomplish:

All we are doing is looking at the time line from the moment the customer gives us an order to the point when we collect the cash. And we are reducing that time line by removing the non-value-added wastes.

We then ask, “Are you interested in reducing your lead time? Do you have non-value-added wastes that you can start to eliminate?” Obviously the answer is yes, every process has waste, or muda in Japanese.

The foundation of the Toyota Way is based upon this simple yet elusive goal of identifying and eliminating waste in all work activities. In fact, when you look at a process as a time line of activities, material, and information flows, and chart the process from start to end, you find a depressing amount of waste— usually far more waste than value-added activity. But seeing the waste is not the same as eliminating it. The challenge is to develop a systematic method for continuously identifying and eliminating waste. A sporadic removal will yield pockets of improvement, but the system-wide benefits that Toyota enjoys are achieved by following a cyclical method of continuous improvement.

The key to forcing waste from the organization lies in this paradox: In order to improve, the condition must be made worse. There is no way to become truly lean without a certain amount of discomfort. Unfortunately, there is no “magic pill” or “silver bullet” that will produce the desired result without sacrifice. As we will learn later, when we link operations together, as in creating a cell, when one process shuts down, the next immediately shuts down. The pain in any part of the process immediately causes pain for the rest of the process.

You might ask, “What could Ohno-san possibly have been thinking?” Some level of improvement can surely be gained without discomfort. There is always “big waste” that can be removed because there is no rational reason for its existence. As an example, we recently heard of a manufacturing company that wanted to “get lean” because of the enormous amounts of inventory after every step of their process. They hired a consultant who sold them scheduling software that figured out how much inventory they needed to sustain flow in their process at each step. They then made it a policy to limit inventory following the computer model. Inventory went down, and the consultant was a hero. Nothing else changed in the process, and there was no pain. Who can beat that?

Unfortunately, nothing else did improve. They got some savings based on the inventory reduction, but nagging problems of equipment downtime, long changeover times that limited flexibility, delays due to shortages of the parts the customer needed, and tons of firefighting were still the order of the day. So waste was reduced, but the root cause problems that accounted for the waste were not. And by the way, over time, the inventory levels began to creep back up.

Real success comes from an improvement process for identifying waste— understanding the root cause and putting in place true countermeasures to this cause. Unfortunately, this is much more difficult than installing a piece of software. Complete success is dependent on three things:

1. A focus on understanding the concepts that support the philosophies of lean, strategies for implementation, and the effective use of lean methodologies, rather than focusing on mindless application of lean tools [kanban, 5S (see page 64), etc.].
2. An unwavering acceptance of all aspects of the lean process, including those that produce undesirable short-term effects. This prevents “cherry picking” only those elements that do not push beyond the comfort
3. Carefully conceived implementation plans that contain a systematic, cyclical, and continuous eradication of waste.

TRAP

We often tour plants that have put in place beautifully laid out cells, without a deep understanding of the purpose. In one exhaust system plant a cell assembled a complete muffler out of an assortment of parts. It was a “one piece flow.” Unfortunately, when we happened to tour the plant certain operations had gotten ahead of others, and they did not have space for the subassemblies they were building. So they began to pile them up on the floor. Rather than stop producing, they continued to overproduce and pile parts on the floor. The plant manager smiled nervously and said, “We try to train them but they do not understand the concept of one piece flow.” He went over and yelled at the offending worker, and then we continued walking. This indicated a lack of clearly defined procedures (standards), an unwillingness to deal with uncomfortable situations, and a lack of “stop and fix problems immediately” mentality. The plant manager did not truly understand or embrace the philosophies of the Toyota Way. He had gotten the form but not the substance of flow.

Toyota has identified seven major types of non-value-adding activities in business or manufacturing processes, which we describe below. You can apply these to product development, order taking, and the office, not just a production line. There is also an eighth waste, which we have included in our list.

1. Overproduction. Producing items earlier or in greater quantities than needed by the customer. Producing earlier or more than is needed generates other wastes, such as overstaffing, storage, and transportation costs because of excess Inventory can be physical inventory or a queue of information.
2. Waiting (time on hand). Workers merely serving as watch persons for an automated machine, or having to stand around waiting for the next processing step, tool, supply, part, etc., or just plain having no work because of no stock, lot processing delays, equipment downtime, and capacity bottlenecks.
3. Transportation or Moving work in process (WIP) from place to place in a process, even if it is only a short distance. Or having to move materials, parts, or finished goods into or out of storage or between processes.
4. Overprocessing or incorrect processing. Taking unneeded steps to process the parts. Inefficiently processing due to poor tool and product design, causing unnecessary motion and producing defects. Waste is generated when providing higher quality products than is At times extra “work” is done to fill excess time rather than spend it waiting.
5. Excess Excess raw material, WIP, or finished goods causing longer lead times, obsolescence, damaged goods, transportation and storage costs, and delay. Also, extra inventory hides problems such as production imbalances, late deliveries from suppliers, defects, equipment downtime, and long setup times.
6. Unnecessary movement. Any motion employees have to perform during the course of their work other than adding value to the part, such as reaching for, looking for, or stacking parts, tools, etc. Also, walking is waste.
7. Production of defective parts or correction. Repairing of rework, scrap, replacement production, and inspection means wasteful handling, time, and effort.
8. Unused employee creativity. Losing time, ideas, skills, improvements, and learning opportunities by not engaging or listening to your employees.

Ohno considered the fundamental waste to be overproduction, since it causes most of the other wastes. Producing earlier or more than the customer wants by any operation in the manufacturing process necessarily leads to a buildup of inventory somewhere downstream. The material is just sitting around waiting to be processed in the next operation. We should note that the main reason the first seven wastes are so critical, according to Ohno, is because of their impact on what we are calling the eighth waste. Overproducing, inventory, etc., hide problems, and then team associates are not forced to think. Reducing waste exposes problems and forces team associates to use their creativity to solve problems.

The remainder of this chapter presents a big picture view of waste reduction. We discuss it in relation to the broader philosophy of the Toyota Way. We also discuss value stream mapping as a methodology for building a big picture view of waste reduction. In Chapters 4 through 9 we go into more detail about specific tools and methodologies for waste reduction in the value stream.

Developing a Long-Term Philosophy of Waste Reduction

In recent years there seems to be an almost maniacal rush to “get lean,” as if there is a finish line in the process. Rapid results and large gains are, of course, part of the allure of the Toyota Way, and there is nothing wrong with the expectation of large benefits. The problem occurs when the short-term push for results crosses paths with some of the philosophical elements, which require a long-term view.

For example, we have led many focused improvement activities, sometimes called the “kaizen blitz” or rapid improvement event. It is exhilarating to see the waste, come up with innovative ideas for waste reduction, and actually make the changes right then and there. The results are almost always astounding to the participants. The new process takes a fraction of the space, there is a clearer understanding of flow, often fewer people are needed, and equipment that had been overproducing is often surplused. The team disbands after a big celebration. But two weeks later the process keeps stopping, some operations are overproducing, the visual management board is not kept up, and it’s business as usual, fighting one fire after another.

The typical problem is that none of the support systems were put in place to sustain what was accomplished in the one-week event. Skilled leadership is absent, for example. Standardized plans for reacting to breakdowns are lacking. There is no good process for daily equipment maintenance. Standardized work may be posted, but it is not understood or followed. The unseasoned manager who does not understand will start to revert to the old process, allowing inventory to build up and trying to drive production through brute force methods to chase the schedule.

The Toyota Way is to build a lasting learning organization in which problems are constantly surfaced and team associates are equipped with the tools to eliminate waste. When this occurs, you are developing a long-term capability for improvement and adaptation to the environment. A well-executed kaizen workshop can be a step in teaching people what is possible. But it should be part of a longer term strategy for developing lean value streams and ultimately a lean enterprise. One useful tool for guiding improvements based on a carefully thought-through plan is value stream mapping.

Value Stream Mapping Approach

Improving isolated processes seems to come more naturally than improving flow across value streams. You can see this in the way most plant tours are conducted. The tour usually starts at the raw material receiving dock, and we might see

trucks being unloaded and then walk to the first process that adds value. The tour guide gives a detailed explanation of that manufacturing process, mar veling at any new technology like machine vision inspection or laser welding. We walk past piles of inventory, hardly noticing, then take a detailed look at the next value-added process.

Often, a lean expert will ask to conduct the tour in reverse, starting with the shipping dock. This is not just a gimmick or a clever trick. Beginning at the end of the flow allows the lean expert to understand material flow from the customer’s perspective. They do not want to know where material is going next, they want to know where it comes from. Is it being pulled from this process or is an earlier process pushing it whether it is needed or not? This will be the basis for the development of the “future state.”

Lean experts will ask questions about the rate of customer demand [takt in the Toyota Production System (TPS)] and how many days of finished goods inventory is being held. They go to the final operation that adds value, often an assembly operation, and ask how the operator knows what to make, in what quantity, and when to make it. They quickly lose interest in the tour guide’s detailed discussion of the nifty automated process that is continuously monitored by computer.

The lean experts are looking at the operation from a value stream perspective. Individual processes need to be stabilized, but the reason for that is to support the flow needed to give the customers what they want, in the amount they want, when they want it. Toyota’s Operation Management Consulting Division (OMCD) was created by Taiichi Ohno to lead major TPS projects and teach TPS by doing. He wanted a tool to visually represent the flow of material and information and pull people back from dwelling on individual processes. Ultimately, that led to what we now call “value stream mapping,” and what Toyota calls the “Material and Information Flow Diagram.”

Originally, this methodology was passed on within Toyota through the learning by doing process—mentors trained mentees by assigning them to work on projects. There was no documentation on how to develop the Material and Information Flow Diagram, and in fact the name didn’t come until long after the method was being used. Mike Rother and John Shook changed that by writing Learning to See (Lean Enterprise Institute, version 1.3, 2004), in which they teach the methodology by walking the reader through a case study on Acme Stamping. You learn how to develop a current state map on one piece of paper that shows your material flow and the information flow that triggers the material flow, and you can see the waste in your value stream. You calculate the valueadded ratio—the ratio of value-added time to total lead time—then learn how to develop a future state map: material and information flow based on flow and pull and building to the customer rate of demand, or the takt time. From there you develop a detailed action plan and do it.

There have been a number of books building on Learning to See. Kevin Duggan, in Mixed Model Value Streams (Productivity Press, 2002), presents in a similar format how to map a process in which there is a great deal of variety in your products and they have different cycle times—for instance, variation in the amount of time needed to machine parts for different products. And for improving repetitive business-office processes, Beau Keyte and Drew Locher, in The Complete Lean Enterprise (Productivity Press, 2004), work through a case in a similar way to Learning to See, except the case is a business process instead of a manufacturing process.

TIP

Management Must Lead Value Stream Improvement Use teams led by high-level managers to do your mapping. Value stream mapping can be narrowly viewed as a technical tool to design your lean system. But the real power is as an organizational intervention to get the right people to become dissatisfied with the waste in their system, develop a shared, realistic vision for the future, and develop an action plan they are enthusiastic about. A well-facilitated two to four day workshop can have wondrous results. The workshop should have all the key functional specialists represented who are touched by the process. It could be facilitated by a lean expert but in terms of content should be led by a high-level manager. The manager should be someone with responsibility and authority over all the main processes in the value stream being worked on. In many cases that means the plant manager. Some companies have organized by product family with “value stream managers,” and they are the obvious candidates to be the content leaders for the workshop.

We will not try to teach value stream mapping in this book. However, we would like to share a number of tips we have learned in teaching and doing value stream mapping:

1. Use the current state map only as a foundation for the future state We are so excited about fixing individual processes when we look at the current state map with all the waste revealed that we want to immediately go to work attacking the waste. Fixing problems in the current value stream simply brings us back to point kaizen (see “Trap: Fixing Problems in the Current Value Stream”). You do not get true flow. The power of lean is in the future state system.
2. The future state map represents the concept of what you are trying to The map does not show the specific details of how it will be constructed. For example, the symbol for a supermarket represents the customer and the storage of materials to satisfy the needs of the customer. The actual setup of the supermarket may vary, depending upon the specific needs of the customer. We will explain the primary lean concepts that are depicted on future state maps below.
3. The future state mapping needs to be facilitated by someone with deep lean expertise. Unfortunately, the simplicity of the mapping method can lead us to believe that anyone who can draw a truck or a stick figure of a person can develop a good future state vision. This is no truer than assuming that anyone capable of using architectural software can design a great house or building. A group should develop the future state map, but someone in the group needs to have real experience with lean and understand deeply what is being drawn on the
4. The purpose of mapping is Often overlooked when companies do mapping is that little section at the end of Learning to See that talks about developing an action plan. Too often we see great-looking maps lining a conference room, but then go out onto the floor and see little evidence of anything we saw on the map. Our tour guide, the lean coordinator, explains that they just spent the last six months on the mapping phase and are now up to the implementation phase. We call this “creating value stream mapping wallpaper.”
5. Don’t develop any map before its time. Its time is when you plan on using it for action. It is better to develop one map for one product family and then implement the map for that product family than to have a mapping phase for a whole plant followed by spotty, inconsistent implementation. Start with one map, implement it, then work on your next map and work to implement that. At some point you will have covered all your value streams much more deeply than if you simply blanket your organization with maps and scattered
6. Someone with management clout has to The reason for value stream mapping is to get away from point kaizen, or only to improve individual processes. But who has responsibility for the whole value stream that cuts across individual processes? Generally, it would be a high-level manager; perhaps a plant or division manager. That person must be passionate about leading the transformation and be personally involved in the entire mapping process.
7. Don’t just plan and do, also check and act. It’s tempting after working so hard on the map and then on implementation, to sit back and feel like we’re done with this lean stuff. Unfortunately, we’ve just gotten started. Whatever is put in place will fall back to a non-lean state unless we’re vigilant about auditing, going to see, and improving further. Once we have achieved much of our future state map, it’s time to develop another current state map on where we are now, and then develop yet another future state map. You should choose time periods for the mapping horizon that encourage concrete action, for example, looking six months to one year into the future is more realistic than five years into the future.

TRAP

Fixing Problems in the Current Value Stream

The real benefit of value stream mapping is that it gets us away from isolated point kaizen and we can build toward a true system based on the flow of materials and information across the entire value stream. We teach this methodology a lot and can recall numerous cases in which we followed up with a student and heard the following:

That value stream mapping is great. I developed a map of one of our processes we wanted to improve, and it revealed all sorts of waste. We did a couple of kaizen workshops, and the improvements were remarkable—we took out three people, we reduced inventory by 80 percent, and freed up half the floor space.

We ask: “What do you mean you developed a map of a process? Didn’t you develop a current and future state map of the entire value stream?”

Answer: “We did not get that far. There was so much waste in our stamping department we started there and developed a current state map to show the waste and went to work right away. At some point we will get to the future state.”

In other words, value stream mapping is being subverted as a tool for point kaizen. You will get a fraction of the benefit by improving isolated processes.

Benefits of the Value Stream Mapping Approach

Value stream mapping is more than a neat tool to draw pictures that highlight waste, though that is certainly valuable. It helps us see linked chains of processes and to envision future lean value streams. Underlying value stream mapping is a philosophy of how to approach improvement. The philosophy is that we need to straighten out the overall flow of the value stream before we deep-dive into

fixing individual processes. The point of improving individual processes is to support the flow.

The maps also provide a “common language” and understanding so that everyone has the same vision. Like a road map, the value stream mapping tool shows the road for the journey, but it is only a guide. It does not detail what you will find along the way. You must have a thorough understanding of the basic concepts and how to create processes that adhere to them. This is when it is very helpful to have someone who has previously made the journey. They not only know where they’re going, but they can save countless hours otherwise wasted by taking wrong turns!

Developing a Current State Map

Developing a current state map seems a simple enough task. Just go out and document what you see. Show the processes and the flow of material from one process to another. That sounds easy enough! What we see in reality is people getting “stuck” in a mapping quagmire. Many people try to make the map “right” when in fact the purpose of mapping is to see that things are far from right. As we will see in Chapter 6, lack of standardization in the work area will at times make the process of capturing reality very difficult. Don’t despair! The purpose of the current state map is to understand the nature of the processes so that an effective future state can be created.

TIP

Make the Level of Detail Fit the State of the Process During the initial cycle through the continuous improvement spiral, data collected from the process may not be completely “clean.” This is often the case prior to achieving a baseline of standardization (on the first pass). Many hours can be wasted in futile attempts to gather data at a detailed level.

For the initial current state mapping activity, keep data at a high level or “overall” for the process. Use rough estimates of key parameters. Process-specific detailed data can be gathered later, when activity is initiated in a particular area.

The main purpose of the first mapping of the current state is to understand the condition of material flow in the value stream and the inhibitors to the flow, as well as understanding the information flow process and the level of activity necessary to sustain it. The future state then provides a high level picture of the flow of material and information, which can be later refined when the process is stabilized.

Understand Your Objectives When Mapping the Current State

As you map the current state, it is important to evaluate the processes with the creation of a future state in mind. It is necessary to understand what you want to achieve when you get “lean” in order to know what the current obstacles are (this is the problem-solving method outlined in Part IV—define the current situation, identify the goal, and recognize the gap between where you are and where you want to be). There may be several goals that you would like to achieve with your lean effort. Here are a few of the higher-level objectives that are typical characteristics of a lean value stream. For your initial efforts in creating a connected value stream, these should be your primary objectives. Subsequent activities can focus on more specific point kaizen improvements and continued elimination of waste.

1. Flexible processes to respond quickly to changing customer requirements, especially increased variety of products. Is the process capable of producing any part at any time?
2. Short lead-time from customer order to completion and delivery of the
3. Connected processes (see Chapter 5) with continuous flow and pull of
4. Each value stream may have separate “flow loops” within the value stream that are identified by points when flow is not These are dictated by the current process limitations.
5. Simplified information flow within the value stream that comes from internal customers (the following process).
6. A clear awareness of the customer requirement (the “voice of the customer”). In a pull environment, the customer (next operation) dictates what is done and when. The voice of the customer should provide:
   • Required rate (takt time)
   • Required volume (quantity)
   • Required model mix
   • Required sequence of production
7. Every value stream and flow loop within the value stream will have a “pacesetter” process that will establish the rate (per takt time) for all other operations.

With these items in mind as you map your current state, you will be looking for the opposite indicators of these conditions, or places where you can create the desired condition. For example, as you look at each process ask, “Is this process flexible—capable of changing from one product to another quickly (within a few minutes)?” Indicators of inflexibility include long setup times and high volume production runs. It’s also important to evaluate whether the previous process is capable of delivering product in the required variety. As you observe the operations, identify the method currently used to compensate for the process incapability.

Inventory is commonly used to compensate for inflexibility. Toyota considers inventory to be an indicator of “weakness” in the process, and the inventory is a constant reminder of the need to strengthen the process. Many people misinterpret this concept to mean that there should be no inventory within the process. Ideally this would be the case, but realistically some processes are currently not capable of operating without some inventory. Toyota is always striving toward the “just in time” ideal; however, in the meantime, the philosophy is to utilize inventory strategically for the best performance results. This strategic use of inventory includes specific rules and controls, as well as location within the flow.

TIP

The Paradox of Inventory

One idea that is difficult to grasp is that in lean systems inventory may be useful (at least in the short term). We all know that inventory is one of the eight forms of waste, and therefore the goal should be to eliminate it. In fact, until processes are capable, the careful use of inventory may be advantageous. One paradox of the eight wastes is that it may be preferable to substitute one form of waste for another (like trading cards).

The key is to think about where the waste is and in what state it is. In other words, is it in finished goods? Is it in WIP? Does the inventory serve the process to achieve one of the larger objectives? Are you minimizing the waste as much as possible? It is preferable to push inventory back “upstream” toward the beginning of the value stream and to use inventory in those situations where it is currently not feasible to flow. Examples include processes that have multiple products and customers, and processes that are inflexible.

As you study and map your operation, identify inventory locations as well as the category (work in process, finished goods, purchased components, and raw materials). Each category of inventory is typically used to compensate for a specific weakness.

Identify where in the value stream the customer order enters the stream (where do you schedule?). How long does it take the product to reach the end

of the stream from that point? If you are “scheduling” at multiple points, note that as well. Multiple scheduling points are an indicator of “push” manufacturing. You will likely see indicators of disconnected processes as well. Look for accumulation of inventory before and after processes. Is it moved forward (pushed) without regard as to whether the next process requested it?

Observe the processes within the value stream that are scheduled by someone from outside the process (normally someone from production control). Also evaluate whether there are any “informal” scheduling methods used. Supervisors often carry a notepad with the “real” schedule based on requests from other supervisors.

TRAP

DANGER!

As you begin to see the “problems” within your value streams there is a tendency to want to “fix” them. If you run out and start fixing these issues, you will be sidetracked from the primary goal—to create a lean value stream. Just because you have finally taken the time to look at your processes and have seen them with their flaws does not mean that you can suddenly expect everyone else to immediately correct the issues. The point here is to see the process as it is today and to understand what will be required to make it better in the future.

If you see people working outside the defined process (as with supervisors and informal scheduling), it is important that you recognize the real issues. People work around systems for two reasons: (1) because they can and (2) because they need to get the job done and the current method does not work (at least they think it doesn’t).

Note: The exceptions are any safety concerns or immediate quality problems that cannot wait.

As you map you are also developing an understanding of current process capabilities. One of the objectives for the future is to create connected flow in the value stream. Observe each process, and determine if it is a “flow through” process: that it is capable of producing any product at any time without consideration or limitation. These processes are not constrained by long setup times or specific conditions that hinder the ability to process various models, sizes, or orders. Indicators of flow-through processes are the ability to “take it as it comes,” and the work is not typically batched into similar groups for processing.

A good example of a flow-through process is parts washing since all parts can be processed similarly with only minor modifications to the operating parameters. Identify the operation in your value stream where the specific part gets its identity. Toward the beginning of the value stream a part may be a “base model” for many finished goods parts. For example, an automobile body in the welding department can become any color vehicle with any interior colors to match. As the body is painted a specific color, it has a color identity. In assembly, each subsequent operation may change the identity to the specific features, such as interior material and option packages. Operations that create part identity will typically receive information regarding what to produce. Depending on the situation, this operation may get an external schedule (from Production Control) or an internal signal, such as a kanban returned from the following operation. Understanding these conditions will be important for developing a future-state-connected value stream.

The future state map in Figure 3-1 shows the seven fundamental aspects mentioned above. If we consider the basic flow, production control takes customer data and the amount of finished goods inventory kept as a supermarket and creates a leveled schedule for the final flow-through processes. This is the one point in the value stream that is scheduled. That process then pulls material from a supermarket, which then creates a production pull two steps back to a process that flows through first in, first out, to the next process. That process pulls from the supplier. This has the desirable properties of a leveled schedule sent to one point and flows connected by pull from the supplier through to the customer.

Your future map will not look exactly like this one. Do not compare this example to your situation and assume that you are unable to implement certain aspects of the process. You should strive to achieve the best result possible for your value stream and create a process that matches your operational needs. Rest assured, however, that all seven elements are to some extent possible in your value stream.

1. In this value stream the finished goods supermarket at the end of the process is applied to improve flexibility. It is used strategically to shorten the time from order to delivery as well (by shipping high-volume items from inventory). If you are a high-variety manufacturer, the use of supermarkets may be possible in some situations (e.g., for the highest volume products). Note in this case that Production Control considers both what is in finished goods inventory and the actual customer demand in developing a leveled schedule (see Chapter 7).
2. Short lead-time. A key characteristic of lean value stream is a very short leadNote that in Figure 3-2 below the lead time is reduced by strategically locating a supermarket of components after the first flow loop. While inventory is considered waste, utilizing it in this manner both improves the flexibility of the value stream and shortens the lead-time. The inventory level in the supermarket is maintained at the lowest possible level, and only remains low until the value stream operations are capable of true flow.
3. Connected processes. Notice that the supermarket illustrates connecting two processes together through pull. The lane with a triangle, circle, and square also shows a connection. This indicates a “sequenced flow”—the flow of material from operation to operation in the same This is sometimes referred to as a FIFO (first in, first out) lane. These connections are specifically defined in Chapter 5.
4. Flow loops. The supermarkets will delineate the beginning and end of a flow loop. They also become the “customer” for each flow loop. The objective is to always satisfy the customer. Although the “true” customer is the operation withdrawing from the supermarket, the consumption from the supermarket represents the In the case of a custom or high variety producer, there may not be a supermarket. The value stream in that case might be one flow loop from beginning to end.
5. Simplified information A key aspect of a lean value stream is the simplification of information flow within the stream. Information is either external or internal. External information from the customer enters the value stream at one point only. All other information about what’s needed to complete the work is generated internally. If supermarkets are used, the supermarket is the source of information. If sequenced flow is used, the information flows with the product. “Schedules” are dictated by one of these processes. We see below, in Figure 3-2, that some mechanisms act as the “voice of the customer.” This information flows to the process to dictate what is to be done and when.
6. Awareness of the customer requirement. Awareness means an actual physical awareness in the work It is not a schedule on a sheet of paper. This will be explained further in Chapter 5, but briefly, it includes the use of signals (kanban), and physically defined connections between operations.
7. Every value stream must have a pacesetter (called the “pacemaker” in Learning to See), and within the value stream, each flow loop must have a pacesetter. The value stream pacesetter will ultimately dictate the pace for all operations, but supermarkets act as a divider of flow loops, and thus require a separate pacesetter.

Limitations of the Value Stream Mapping Approach

When Mike Rother and John Shook wrote Learning to See, they realized there was a danger in getting this book out to the public. They were afraid it would appear to be a cookbook, making lean as easy as following steps 1, 2, 3. Unfortunately, the reality is far more complex. There is a reason that within Toyota you spend

Figure 3-1. Basic example of future state

Flow Loop Flow Loop

Value Stream

Figure 3-2. Future state value stream with elements defined

years in the plant working on improvement projects before you even reach novice status in the Toyota Production System. There is a lot to learn that can only be learned by doing. Mapping makes people feel like they’re doing lean, but it is simply drawing pictures. To push an earlier analogy further, if I hand you a blueprint, it does not mean you can build the house. There are many skills involved.

Creating Flow Step by Step

Value stream mapping gives us a picture of how to put the pieces of the puzzle together to get a connected value stream. When we do specific point kaizen, we can reduce changeover time here, set up a cell there, put in a few mistake-proofing devices across the plant, and end up with little islands of improvement. But the big bang comes from setting up a system where material flows smoothly across processes based on the takt time—the rate of customer demand. The operations should be synchronized like a fine symphony orchestra. But how do we get to this point? Once the future state map is drawn, how should we proceed to implement it?

The creation of lean processes requires a methodical, step-by-step approach. The first step prior to setting up one-piece flow is to create a stable process capable of meeting customer requirements. The creation of flow, and the subsequent connecting of operations, forces problems to surface, and any abnormalities will shut down production. It is imperative that all operations achieve a basic level of consistent capability prior to the establishment of flow. If flow is attempted before this basic readiness, the result could be catastrophic. Do not aim for perfection, since improvement should continue once you have set up good flow. After one operation has reached this level, a second process is stabilized, and then the two processes are “connected,” or “linked,” making each process dependent on the other. This continues over and over until all operations in the value stream are connected, and flow with minimal stoppages is continuous from the first operation to the last. The continuous improvement cycle is shown in Figure 3-3.

This process is typically introduced in a “phased” or “staged” implementation. Initially each operation in the value stream progresses through the phases independently. After successfully connecting to other operations, the entire chain progresses concurrently. With a step-by-step compression of the time frame representing the customer requirement—weekly schedules become daily, become hourly, and so on—the process with the greatest weakness (most waste) will appear.

This repeated loop could be thought of as a spiral of deepening flow as illustrated in Figure 3-4. Each cycle through the phases results in ever smaller

Figure 3-3. Continuous improvement cycle

quantities of waste, and in “tighter,” more efficient work. At some point continuous improvement becomes a series of small, incremental improvements. However, periodic major changes in the environment or in the product will create instability, and then large improvements will be needed, starting all over down the spiral. For example, product model changes, the introduction of new products and processes, and changes in plant facilities will naturally create more variation, and thus instability, in the process.

Stabilize

Level Incrementally

Create Flow

Standardize

Create Flow

Stabilize

Create Flow

Standardize

Stabilize

Create Flow

Level Incrementally

Level Incrementally

Stabilize

Level Incrementally

Standardize

Stabilize

Standardize

Create Flow

Figure 3-4. Continuous improvement spiral

Toyota senior executives in the period of 2002-04 intentionally created instability because they believed that intensified competition from low wage countries like China and Korea could threaten Toyota’s global leadership. They requested major cost reductions of 30 to 40 percent over two to three years in their own plants and the plants of suppliers. Small, incremental changes could not possibly achieve these targets. Managers who had grown accustomed to fine-tuning stable operations had to take a fresh look at all processes and make big changes that created instability when moving up the spiral. We saw this while visiting the first American Toyota plant in Georgetown, Kentucky, in 2004. They had been so focused on growth in the 1990s that some of the TPS discipline had slipped. In 2002 they received severe marching orders from Japan to improve. The engine plant, for one, was asked to reduce total costs by 40 percent—an astounding number. But by 2004, they were well on the way to achieving these aggressive goals. And in the process, TPS was tightening up across the operations, leading to major improvements in productivity, quality, and safety.

Sequential and Concurrent Continuous Improvement

Initially the implementation begins with reaching a basic level of stability within one cell or line—known as “disconnected stability” (see Figure 3-5, below)— which is not connected to its customer process or its supplier process. If the process is a cell or line (multiple operations within one area), the flow phase can be initiated within the process. If the operation is independent of others, the flow phase is not initiated until “connection” is made with additional operations. This is “multiprocess connected stability.” Connecting two or more individual operations, cells or lines, may create new stability challenges that need to be corrected prior to advancing.

Figure 3-5. From disconnected stability to value stream connected stability

Finally, as all processes pass through the first phase of stability and reach a capability level to support connection, they are connected across the entire value stream. This is “Value Stream Connected Stability.” The initial process of moving through the Continuous Improvement Cycle to achieve system-wide stability and flow can take years of effort.

We generally recommend creating a fully connected value stream within your own plant or operation before moving out to your customers and suppliers. Once you have your house in order, you can begin to work with suppliers to help connect them to your lean processes. The same approach applies. They need some level of internal stability before it is valuable to connect their operations to yours through pull systems. And then you still face a problem if your customer is not lean and does not understand the Toyota Way philosophy. Educating your customer is certainly challenging since they hold the purse strings. But this can be done in small steps, and when they see the benefits, they’ll want to learn more and you will become even more valuable to them. The ultimate goal is a connected lean enterprise.

In sum, waste reduction sounds easy but there is actually much to it. The purpose is not to simply make one pass over your operation to seek and destroy waste. The purpose is to create a connected value stream in which all team associates are being forced to think, solve problems, and eliminate waste. In the chapters that follow we will go into more detail on the process of creating connected value streams.

Reflect and Learn from the Process

1. Before you begin your waste reduction journey, take time to assess the potential challenges you will face compared to the potential rewards of Don’t make the mistake of counting only the rewards. The road to riches is filled with many obstacles.
   1. Carefully consider potential financial gains (see Lean Thinking in Table 5-1 on page 89, Table 6-1 on page 118, Table 7-1 on page 138 and Table 8-1 on page 179 for estimates of potential gains). Develop a five-year financial statement that reflects the potential financial rewards and opportunities for
   2. In every company there is a link between the employees, the customers, and the Employees who feel a sense of purpose and belonging are more fulfilled, and this will affect customer service and ultimately company performance. It is difficult to measure these items (the so called soft side benefits) from a direct financial standpoint.
      1. Identify at least two other potential benefits of implementing the Toyota Way that are not financial in
      2. What are the likely longer term financial benefits that will come from these nonfinancial benefits?

• What are the specific challenges of attaining these benefits?

1. Reflect on the biggest personal challenge you will face on this What personal changes will you need to make?
2. Reflect on your organization in terms of Does long-term thinking exist or will you need to make changes?
   1. Identify specific changes that will need to be made. Incorporate action items into your lean journey plan (at least a five-year plan).
   2. How will you avoid the “flavor of the month” syndrome?
3. Will the culture of your company support your waste reduction efforts?
   1. Identify the three strongest aspects of your culture in terms of cooperation, creativity, perseverance, communication, energy, commitment, vision, team spirit, and so
   2. How can you leverage each of these strengths?