Lean Six Sigma terminology, Lean Six Sigma dictionary

Lean management is a management style that promotes reducing waste through the elimination of non-value added activities (streamlining operations), eliminating work in process and inventory, and increasing productive flexibility and speed of employees and equipment.

Non-value added activities in a process include any step that: (1) customers are not willing to pay for, (2) do not change the product or service, (3) contain errors, defects, or omissions, (4) require preparation or setup, (5) involve control or inspection, (6) involve over-production, special processing and inventory, or (6) involve waiting and delays.

Value added activities include steps that customers are willing pay for because they positively change the product or service in the view of the customer.

Value Added/Non-Value Added (VA/NVA) flowcharts are used to identify non-value added steps in a process for possible elimination or modification, thereby reducing the complexity of a process.

Complexity refers to the number of products or services, or their variants, offered by an organization. This is a different definition of complexity that described in the VA/NVA definition.

Work in process (WIP) are the “things” in a process that are not yet finished, for example, computers not yet assembled, documents not yet filed, e-mails needing a response, customer complaints awaiting a response.

Lead time is the cycle time for a “thing” to be processed from the time a customer places an order until the time the customer receives the order.

Little’s Law is used to estimate the average lead time for the “things” in a process:

Average Lead Time = (Average amount of WIP per period of time)/(Average completion rate per period of time).
In other words, the average lead time is the average length of time a “thing” waits to be completed in a process.

PCE is the proportion of a process’ steps that are value added steps, as oppose to non-value added steps. Process cycle efficiency is computed as follows: PCE = (Average value added time for a “thing”)/(Average total lead time for a “thing”).

The hidden factory refers to the reduction of WIP and the increase in speed (shorter average lead times) created by applying lean management in your organization.

Value Stream is a relatively new business term that describes all the value added and non-value added process steps and decisions necessary to move a product or service from supplier to customer. These steps include design and redesign, raw material flows, sub-component flows, information flows, production and service flows, and people flows, to name a few steps.

A value stream map is a critical tool for identifying the gaps between the current state of a value stream and its desired future state. Additionally, it provides a list of the projects necessary to realize the future ideal state.

A value stream manager is the person directly responsible for a product family as it moves through its entire value stream.

Law 0: The Law of the Market – Customer CTQs, ROIC (Return on Invested Capital), and NPV (Net Present Value) are the highest priorities in a Lean/Six Sigma effort. The law of the market is called the 0^th law because it is the base on which the other laws are built.

NPV - The future stream of benefits and costs converted into equivalent values today. This is done by assigning monetary values to benefits and costs, discounting future benefits and costs using an appropriate discount rate, and subtracting the sum total of discounted costs from the sum total of discounted benefits.

ROIC - A measure for determining the effectiveness of a company’s management team and how well a company uses the money invested in its operations. Computed using the following formula: ROIC = (Net Operating Profits after Taxes)/(Invested Capital).

Law 1: The Law of Flexibility - The velocity of any process is proportional to the flexibility of the process. The First Law of Lean/Six Sigma explains that process velocity, batch size, and workstation turnover are all interrelated. If team members change one of the above three variables, then they will effect the other two variables. Maximum flexibility is directly related to minimum batch size.

Minimum Batch Size = (Customer demand rate per period of time)*(Minimum workstation turn over per period of time). So, team members must decrease workstation turn over time to decrease batch size! That is how team members increase the flexibility of the process.

Law 2: The Law of Focus – Twenty percent of the activities in a process cause 80% of the delay. This is called the Pareto Principle. “Time traps” are the steps in a process that add delay time. Team members use the Pareto Principle to prioritize time traps for attention in Lean/Six Sigma projects.

Law 3: The Law of Velocity - The velocity of any process is inversely proportional to the amount of work in process (WIP). Little’s Law shows that we can speed up a process (decrease the average lead time) by either increasing the average completion rate per period of time, decreasing the average amount of WIP per period of time, or both. The critical insight is that we can speed up a process (cut average lead time) by decreasing average WIP! Lean management is very helpful in decreasing WIP.

Law 4: Complexity - Complexity is a Lean/Six Sigma term that refers to the number of products or services, or their variants, offered by an organization. The complexity of the service or product offering adds more non-value costs and WIP than either poor quality (low process sigma) or slow speed (un-lean) process problems.

A lean value stream is a value stream in which an upstream process only makes what a downstream process needs, when it needs it. There is no (or little) inventory.

Takt time indicates the pace at which every step in the process must produce one unit of output to meet customer demand per time period, for example, per shift.

A pacemaker process is the point of entry of the customer’s order into the lean value stream. In other words, the pacemaker process is the process in the lean value stream that is directly controlled by the customer’s order. The pacemaker process sets the “pace” for all processes upstream of it in the lean value stream. All output from the pacemaker process flows directly to the customer. There are no pull systems (definition below) or supermarkets (definition below) downstream of the pacemaker process. The lead time for the output of a lean value stream process using a supermarket pull system is the difference between “the time the customer order is received by the pacemaker process” and “the time finished output is placed in the supermarket before the pacemaker process.”

A loop is a section of a value stream that can be improved independently of all other sections. Basically, breaking a value stream into loops makes it possible for team members to conduct small and sequential implementations on the sections (loops) of a future-state value stream, instead of one massive implementation of an entire future-state value stream.

The pacemaker loop includes the material, information and people flows between the customer and the pacemaker process. Remember, the pacemaker process is at the extreme end of the value stream and sets the takt time for the entire value stream.

The supplier loop includes the material, information, and people flows between suppliers and the most upstream processing loop in the value stream.

The processing loops include all the continuous flow processing steps between the pacemaker loop and the supplier loop. Each continuous flow processing loop begins after the supermarket from the processing loop before it and ends with it own supermarket.

A loop supervisors is the individual that is responsible for the optimization and management of a loop within a value stream.

Continuous flow refers to a process with a batch size equal to one. Each unit passes immediately from step to step without any waiting time in between steps. Processes with a batch size of one and no waiting between the steps in the process is the “holy grail” of production and service.

A supermarket is an inventory facility that is used if continuous flow does not extend upstream in a process; in other words, if batching is necessary, then supermarkets are used to regulate process flows.

A pull system initiates production/service in a given step in a process using a request from the next downstream step in the process.

A kanban is a preprinted card that is used to send a message to a supplier department to produce or process “x” units of product for a supermarket, or to send a message to customer department to withdraw “x” units of product from a supermarket. Kanban systems control the flow of material, information and people in a value stream. They are used to keep the demand for material, information or people at a constant rate. This prevents the need for overproduction and inventory to deal with a variable demand rate for a product.

A withdrawal kanban is an instruction to a supermarket that customer process B is withdrawing “x” units from supplying process A’s supermarket.

A production kanban is an instruction to supplying process A from its supermarket to produce “x” more units for the supermarket.

A supermarket pull system is a batching location for products that can be drawn on to meet customer’s orders.

Pack size is the number of finished parts that can be placed in one finished goods container.

Pitch is calculated by multiplying takt time by pack size.

Total Productive Maintenance (TPM) is a theory useful for maintaining plants and equipment with total involvement from all employees. Its objectives are to dramatically increase production and employee morale by: (1) decreasing waste, (2) reducing costs, (3) decreasing batch sizes, (4) increasing production velocity, and (5) increasing quality (conforming goods).

Breakdown maintenance occurs when employees are reactive to equipment failure and effectuate repairs only after a failure has occurred on a piece of equipment. Frequently, breakdown maintenance requires a maintenance prioritization system. These systems frequently are in effective due to worker abuse. The nature of the abuse is caused by a worker rating a needed repair as critical, when it is not, to get breakdown maintenance attention quickly.

Preventative maintenance is a routine and scheduled process of maintenance (cleaning, inspection, oiling and re-tightening) of plant and equipment. It is used to ensure the proper functioning of plant and equipment and to decrease the incidence of failure of plant and equipment by preventing entropy (deterioration). Entropy (deterioration) can be stopped or reversed through a program of periodic inspection or equipment condition diagnosis. There are two types of preventative maintenance: periodic maintenance and predictive maintenance.

Corrective maintenance is a process that redesigns equipment, and component parts, so that employees can reliably perform preventive maintenance.

Maintenance prevention is a process of designing new equipment so that it is robust against critical failure modes.

Jishu hozen (autonomous maintenance) is a method for employees to take care of small maintenance tasks in their work areas, consequently, freeing up time of skilled maintenance employees for more value-added maintenance tasks. The operators are responsible for upkeep of their equipment.

Kaizen is a method for promoting small improvements on a continual basis throughout an organization. A kaizen is a short lived project lasting no more than 4 or 5 days, for example, using quick changeover methods to dramatically reduce set up time in an operation. It is the opposite of breakthrough improvements. Kaizen requires no or little investment.

Planned maintenance promotes trouble free plants and equipment. There are four types of PM. They were discussed earlier: (1) preventive maintenance, (2) breakdown maintenance, (3) corrective maintenance, and (4) maintenance prevention. Planned Maintenance is a proactive process, as opposed to reactive process.

Quality maintenance promotes customer satisfaction through the delivery of products and services that surpass customer specifications. This is accomplished by creating conditions for plants and equipment that decrease performance variation around the desired nominal levels for each piece of equipment. Quality maintenance activities are accomplished when employees use the PDSA cycle in respect to maintenance issues.

Quick changeover is a technique that team members can use to analyze, and then reduce: (1) the time it takes to setup equipment (including tools and dies) and people (for example, shift to shift setup for cashiers in a supermarket), (2) the resources required for a changeover, and (3) the materials necessary for a changeover. It creates the opportunity in a value stream to effectively and efficiently institute small batch sizes, or even one-piece flows.

Poka-yoke (pronounced POH-kah YOH-kay) is Japanese for mistake-proofing devices. These devices are used to prevent the causes of defects and/or defective output (called errors), or to inexpensively inspect each item that is produced to determine whether it is conforming or defective. A poka-yoke device is any mechanism that prevents a mistake from being made or makes the mistake obvious at a glance.

The 5Ss form a system for tidying up and maintaining a process. Each of the Ss is discussed below.

Seiri means throwing away unnecessary "Things" and putting necessary “Things” in order, that is, organizing “things” using specific rules. Once an employee has internalized the rules for organizing “things,” he or she will quickly be throwing away unnecessary "things" and be able to find the things

Seiton means tidily putting “things” in their proper place which is determined with seiri. Putting things away requires following two rules: (1) deciding where things belong and (2) deciding how things should be put away. Follow the put-away rules to leave things where they can be quickly and properly found next time they are needed.

Seiso is an attitude that considers a dirty and untidy work place intolerable. There are three broad levels of cleaning. First, there is the overall cleaning of everything. Secondly, there is the cleaning of specific items, tools, machines and workplaces. Thirdly, there is the cleaning at the detail level, getting to grime in screw threads, corners and crevices.

Seiketsu is visual management. Visual management leverages location, distance, shape, brightness, color, and contrast so that something stands out when we are looking for it. Visual controls include work instructions, hazard warnings, indicators of where things are kept, equipment and tool designations, cautions and reminders, and plans and indicators of what happens when. Whenever people need reminding, a visual control should be there to help them.

Shitsuke draws together the other four Ss ensuring they are used properly. People make mistakes, forget, and do things incorrectly. We also get stuck in habits which are not helpful with our work. Habits are, however, very useful things, and if we can align them with the work disciplines of the 5Ss, we can forge them into a complete disciplined approach.