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How Lean Thinking fits with environmental issues and how Environmental Management is a Cost Saving, not a Cost Professor Tony Bendell Managing Director

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Title: How Lean Thinking fits with environmental issues and how Environmental Management is a Cost Saving, not a Cost Professor Tony Bendell Managing Director


1
How Lean Thinking fits with environmental issues
and how Environmental Management is a Cost
Saving, not a CostProfessor Tony
BendellManaging Director Principal
ConsultantServices Ltd Charnwood House17
Caythorpe Road , LowdhamNottingham, NG14 7DZ
tel 44 (0)115 9669460 fax 44 (0)115
9663191e-mail tony_at_servicesltd.co.uk
www.servicesltd.co.uk
1
2
Two Hot Topics
  • Environmental Management
  • Enormous legal ethical pressure to manage
    environmental impact of Operations
  • Lean Operations
  • Great current interest for operational
    efficiency, cost reductions and spreading limited
    resources more thinly

3
Two Hot Topics but kept apart
  • Both concerned with controlling waste and
    inefficient use of resources
  • Both involve aspects of systems and processes,
    human behaviour and culture, standardisation and
    audit

4
What is Waste?
  • Waste and Emissions
  • Utility Consumption
  • Unnecessary use of Raw Materials
  • Unnecessary Processing and Process Inefficiencies

Muda
5

Carbon Reduction Imperative
Why Lean? Cost and Customer Focus Emphasis on
Process Efficiency
Why Environmental Management? Legal
Compliance Emphasis on Waste and Emissions
6
Environmental Impact and Carbon Footprint of
Operations
  • Utilities
  • Raw Materials and bought-in services
  • Waste and Emissions
  • Processing/Activities

7
Environmental Impact and Carbon Footprint of
Operations
  • Utilities
  • Raw Materials and bought-in services
  • Waste and Emissions
  • Processing/Activities
  • Basic Cost
  • The 7 Wastes eg. Unnecessary transport and
    storage
  • Management and Support Processes
  • Basic Cost
  • The 7 Wastes

Utilities and Raw Materials bought-in services
8
Correlating Process Inefficiency and Waste
Waste and Emissions
Low
High
Oil Refineries
(some) Pharmaceuticals
High
Internet-based Financial Services
Process Inefficiencies
Labour intensive Craft Workshop
Low
High
Low
8
9
Correlating Process Inefficiency and Waste
Lean and Green Saving Money through Good
Environmental Management, 1 May09
Waste and Emissions
Low
High
Lean
Today
High
Environmental Management
Carbon Reduction Imperative
Process Inefficiencies
Low
High
Low
9
10
What is the Lean Approach?
  • Drive to reduce cost and improve customer
    satisfaction by improving process efficiency
  • Focuses everything on Value to the customer (and
    possibly other stakeholders)
  • Non Value Adding activities are minimised
  • Value Adding activities are streamlined

11
The Origins of Lean
  • Manufacturing
  • Automotive Industry
  • TPS
  • The war on waste
  • Just-in-Time - a pull system
  • Reduced inventory
  • Supplier partnership
  • Jidoka - identification of defects at source
  • Operator empowerment
  • autonomation

12
Lean Principles
  • Value
  • The Value Stream
  • Flow
  • Pull
  • The Pursuit of Perfection

13
Value
  • As perceived by the customer (and what he will
    pay for) and fully understood by the supplier
  • Quality
  • Key characteristics, quality spec.
  • Cost
  • Economies of scale, premiums
  • Delivery
  • JIT, specific delivery schedules
  • Danger when organisational value overrides
    customer perceived value
  • It is not uncommon for function or
  • departmental priorities/needs to undermine
  • the process
  • In Public Sector processes, value also needs to
    reflect all stakeholders value perceptions.

14
The Value Stream
  • Identifying and defining the main flow of the
    value adding activities to achieve the customer
    or stakeholders perceived value of product or
    service.
  • Recognition and identification of a process
  • First opportunity to identify non-value adding
    activities MUDA
  • A lean organisation will be mindful of
    maximising the ratio of added value to
    non- added value activities

15
Value Added Analysis
  • Real value added activities as perceived by the
    customer or stakeholders
  • Improve efficiency
  • Improve speed of reaction
  • Business value added activities required to run
    the business
  • Reduce to a minimum
  • Non-value added activities do not add customer
    or stakeholder perceived value nor are required
    to run the business i.e. WASTE

16
Typical Examples of Value andNon-Value Added
Activities
  • Real Value Added
  • Acknowledging a Customer Order
  • Delivering a product
  • Processing a Customer Order
  • Providing after sales service
  • Business Value Added
  • Updating financial accounts
  • Updating training records
  • Issuing Purchase Orders
  • Negotiating price
  • Non-Value added
  • Rework
  • Authorisations and Approvals
  • Checking and Inspection
  • Internal transport
  • Reviews and Audits
  • Complaint Handling
  • Processing Customer claims/credits
  • In process storage

16
17
Typical Examples of Value and Non-Value Added
Activities
  • Real Value Added

Business Value Added
  • Non-Value Added

17
18
Waste - The Enemy of Competitiveness and Best
Value
  • 7 Wastes originated by Taiichi Ohno of Toyota
  • The Elimination of Waste leads to a leaner and
    fitter operation leading to improved
  • Quality
  • Cost
  • Delivery
  • Waste is when we are not Adding Value for the
    Customer
  • Waste is "Public Enemy No. 1"

19
The 7 Wastes Are
  • OVER PRODUCTION making, or doing more than is
    required
  • WAITING for something to happen!
  • unnecessary TRANSPORT of materials or
    work-in-progress
  • OVER PROCESSING due to poor design of services,
    products, equipment or processes
  • INVENTORIES that are bigger than they need to be
    - just in case!
  • unnecessary MOTION by people doing their work
  • the creation of parts, products or services which
    have DEFECTS

20
New Wastes
  • The Waste of Talent
  • Lack of people/skill development
  • Failure to encourage and establish an environment
    of innovation and creativity
  • Inefficient use of utilities
  • Creating harmful emissions and products/bi
    products
  • Packaging

21
Waste of Overproduction
  • Making or doing too much, too early,
    just-in-case
  • Excessively long lead times
  • Increases work-in-progress (work-not-in-progress)
  • Cost issues dictate big batches because of
    lengthy set-ups
  • Makes us feel safe
  • Make what is required just-in-time
  • Smooth the flow - Speed the flow
  • Control the flow around the bottleneck
  • Focus on set-up reduction

22
Waste of Waiting
  • Time is of the Essence
  • Impatient Customers and Shorter Lead Times
  • 70 to 80 of Lead Time is Queuing or Waiting
  • Reduce the number of Jobs flowing through the
    process
  • Keep the bottleneck working
  • Move jobs to the next operation quickly
  • Examine Waiting at Equipment?
  • Machines
  • People
  • Competitive pressures dictate that we must find
    something else to do during cycle times

23
Waste of Waiting
  • Throughput Efficiency Work Content x 100
  • Time
    in System

23
24
Waste of Over Processing
  • Using a "Hammer to Crack a Nut"
  • Inappropriate machine for the job
  • Is technology always the answer?
  • Complicated Set-Ups

25
Waste of Unnecessary Inventory
  • Too much Inventory
  • Hides the problems - quality issues
  • Slows down the flow
  • Occupies expensive space
  • Ties up working capital
  • Minimal Inventory
  • Is the Goal (zero may not be achievable)
  • Aids visibility - stock and job counting, quality
  • Most applicable in a repetitive environment

26
Process Flow
  • Value must flow through the process
    continuously
  • Traditional to batch processing
  • Excuses for batching can be financial or
    operational e.g. full utilisation of capital
    equipment, reduced changeovers/set-ups

27
Pull
  • This is the action of the customer pulling the
    added value activities through the process to
    receive goods or service how and when needed

28
The Pursuit of Perfection
  • Effective transformation to lean is achieved
    when
  • Value is specified and understood
  • Added value to non-added value is maximised and
    waste is eliminated
  • The value stream flow is smooth and continuous
  • The value added activities are pulled in line
    with customer demand
  • BUT

29
The Pursuit of Perfection
  • All of this could come to nought if
  • The effort to sustain the transformation falters
  • Practices not in place to develop a continuous
    improvement policy

30
Lean and Green Saving Money through Good
Environmental Management, 1 May09
Value Stream Mapping (VSM)
  • A simple tool for visualising the door-to-door
    service flows in your organisation
  • Focuses lean efforts on improving the whole value
    chain (rather than optimising the parts) to
  • Establish flow
  • Eliminate waste
  • Add value
  • Captures material movements and information flows
    in one current state picture
  • Provides step-by-step approach to creating an
    ideal future state (where non-value adding
    activities are minimised)

30
31
Why is VSM Important?
  • It helps you visualise more than a single
    operation (e.g. data entry, case evaluation etc.)
  • It helps you see sources of waste
  • It provides a powerful communication tool
  • It bring lean concepts and tools to life
  • It focuses improvement activities
  • It shows the link between information flow and
    material and job flow

32
Stages of VSM
  • (1) SELECT A PRODUCT/SERVICE the selection of a
    product/service, or family of products/services
    which follow similar process routes
  • (2) CURRENT STATE MAP drafting a current state
    map to reflect work flow, information flow and
    sequence of processes
  • (3) FUTURE STATE MAP creation of a future state
    map. This is the teams vision of the ideal
    condition in which wasteful elements have been
    resolved
  • ACTION PLAN development of an action plan. A
    detailed to do list which prioritises each
    action to realise the future state
  • IMPLEMENT MONITOR PROGRESS ACCORDING TO THE
    PLAN
  • CONTROL TO KEEP THE GAINS
  • THINK ABOUT WHATS NEXT

33
Mapping the Process
Current State Map
  • Start with customer need e.g. quantity, order
    size, frequency, service level
  • Map each service process using a box - a
    separate box indicates that processes are
    disconnected and job flow stops (e.g. jobs are
    moved in batches). Start at the customer end and
    work backwards using post-it notes.
  • Collect process data for each box that is a
    measure within the process
  • C/T (cycle time)
  • C/O (changeover time)
  • Batch size
  • Number of operators
  • Number of product or service variations
  • Job size
  • Working time (i.e. excluding breaks)
  • Rework/Scrap rate
  • Value added time
  • Note the location and amount of inventory
  • Map the supply process e.g. volume, batch size,
    frequency

34
Typical Current State Value Stream Map for
Manufacturing
Operating Hours Shift Pattern Usage Rate
Delivery Window
Supplier Lead Time Batch size
Production Control
Daily/weekly/monthly
Deliveries per day/week/month Delivery batch size
Production Manager
Ship
34
35
Current state map
An Example Current State Map (Automotive Seat
Manufacturing)
35
36
District Council Current State Map (Waste
Collection)
Regulations Targets
Service agreement or contract parameters (e.g.
Regulatory)
  • Citizens
  • County Council
  • Recycling Contractor

In-house or out sourced Supplier
Head of Service
deliver to waste amenities
allocation of Vehicles people from depot
collect on set route
re-batch at depot
store and deliver recyclables
36
37
Future state map
Aims of Future State Map
  • Get one process to provide only what the next
    process needs when it needs it
  • Link all processes from the final customer back
    to initial input
  • Avoid detours in the process
  • Develop continuous flow wherever possible

38
(3) Future state map
An Example Future State Map
38
39
Implementation
  • The 5 Stages are
  • Creating a framework for the programme
  • Identifying the value stream, analysing and
    standardising the process
  • Streamlining the process to create flow of the
    value-creating steps
  • Pulling the product or service according to
    customer demand
  • Continually improving the process in the pursuit
    of perfection

40
How Can Environmental Management be a Cost Saving?
  • 7 Wastes
  • Overproduction
  • Waiting
  • Transport
  • Over Processing
  • Inventories
  • Motion
  • Defects
  • New Wastes
  • Talent
  • Packaging
  • Utilities
  • Emissions Products/By-Products

Cost ? ? ? ? ? ? ? ? ? ? ?
Environmental Impact Primary Secondary Primary Pri
mary Secondary Secondary Primary Primary/Secondar
y Primary Primary Primary
The Answer Managing the Environmental Impact of
the Process will help manage Cost of Process
Operations
41
The 5 Lean Principles and the Effect on the
Environmental Impact
Effect on Process Cost
Effect on Environmental Impact
  • Value
  • The Value Stream
  • Flow
  • Pull
  • The Pursuit of Perfection
  • Dont waste money
  • Minimises
  • Minimises
  • Minimises
  • Minimises
  • Minimises
  • Minimises
  • Minimises
  • Minimises
  • Minimises

41
42
The Whole Life Model
Operating System (Operations Cost)
Building System (Capital)
Dispose of system (Disposal Cost)
  • Cost/Value
  • Environmental Impact

43
PROCESSES AND ACTIVITIES
OUTCOMES
OUTPUTS
CAPITAL INFRASTRUCTURE
UTILITIES
RAW MATERIALS
OTHER INPUTS
WASTE EMISSIONS/DISPOSAL
MANAGEMENT
CONTROLS
43
44
Example of Advantage of Value Stream Thinking
Internal Mail
Building 1
VAN
Building 2
  • Reduce Environmental Impact (Environmental
    Management)
  • - Bicycle
  • Eliminate (Value Stream)

44
45
Internal Mail
Lean and Green Saving Money through Good
Environmental Management, 1 May09
Environmental Impact
Low
High
Frequent Van Service
Old Van?
High
Pushbike/trolley
Electric Van
Cost
Low
  • Capital
  • Operations
  • Disposal

High
Low
45
46
Summary
  • Environmental Management and Lean thinking are
    related
  • The 7 Wastes ( New Wastes) and the Value
    Stream are useful tools that apply to
    Environmental Management as well as Lean Cost
    Minimisation
  • Utilising the Lean approach, Environmental
    Management can be a Cost Saving rather that a
    Cost

47
Using the Lean Approach for Environmental
Management
  • Apollo Hardwoods
  • Baxter Healthcare
  • Bowing
  • Columbia Paint and Coatings
  • G.E.
  • General Motors
  • Goodrich
  • Lockhead Martin
  • Plymouth Tube
  • Robins US Air force Base
  • 3M
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