IT Today Catalog Auerbach Publications ITKnowledgebase IT Today Archives infosectoday.com Book Proposal Guidelines IT Today Catalog Auerbach Publications ITKnowledgebase IT Today Archives infosectoday.com Book Proposal Guidelines
IT Today is brought to you by Auerbach Publications

IT Performance Improvement

Management

Security

Networking and Telecommunications

Software Engineering

Project Management

Database


Share This Article



Free Subscription to IT Today





Powered by VerticalResponse

 
A Tale of Two Systems: Lean and Agile Software Development for Business Leaders
Lean Six Sigma Secrets for the CIO
The Business Value of IT: Managing Risks, Optimizing Performance and Measuring Results
Accelerating Process Improvement Using Agile Techniques
Service-Oriented Architecture: SOA Strategy, Methodology, and Technology
Enterprise-Scale Agile Software Development
The Green and Virtual Data Center

Understanding Lean Concepts

by James William Martin

Key Goals of a Lean System

Figure 1 shows several key goals of a Lean system. This first key goal is to understand customer requirements by gathering the voice of the customer (VOC) relative to their needs and values expectations. Recall that discussions of the VOC appeared in earlier chapters. In these discussions, it was shown that understanding the VOC is essential to any improvement methodology including APM with scrum as well as Lean. Also, in Chapter 4 we discussed that customer requirements consist of Kano needs and value elements. We also discussed that value elements can be broken down into subcomponents of price and convenience, and that convenience can be broken down further into the subcomponents of time, utility, or usefulness and relative importance.

Key goals of a Lean system.

Figure 1. Key goals of a Lean system.

A second goal of a Lean system is to translate customer needs and value expectations when designing new products or services or modifying current ones. To help in this work, there are several common Lean tools and methods which can be employed by a design team to facilitate translation activities. First, product designs should be analyzed for their value content. Value content is evaluated relative to the VOC and voice of the business (VOB). Recall that the VOB includes internal organizational stakeholder needs and values. However, we want to ensure that the VOC has the higher priority and that the VOB does not contradict the VOC. Once the VOC and VOB have been analyzed to understand their required value content, this information is used to directly build value into a new product or service. If a product or service currently exists, then its design should be analyzed to determine the percentage of value-adding (VA) content. For example, in an existing service process, value can be identified and analyzed using the VOC to create a value stream map (VSM) of the process workflows. In contrast, in an evaluation of VA content of a product, a value analysis is used to determine the relationships between customer requirements and the features and functions of the product. Features and functions not valued by customers or required by internal stakeholders should be eliminated from a product's design if technically possible.

Performance measurements are used to measure system key attributes once product or service designs have been created or modified. Measurements include the percentage value content, specifications describing required product or service performance characteristics, unit cost, and overall cycle time. Design metrics help to measure and quantify how well customer requirements are being met in practice by a Lean IT team. It should also be noted that additional metrics help to measure how well a Lean IT team manages its project activities. In summary metrics are used to measure the effectiveness and efficiency of designing products and services as well as the management of a project's work activities. Once products and services have been created and their performance measured, the goal of an organization should be one of continuous improvement to squeeze out any remaining non-value-adding (NVA) work tasks for service processes, or NVA features and functions for products. This continuous improvement strategy will help to ensure that customer requirements are met using the simplest product and work process designs to reduce a Lean IT project's cost and cycle time.

A third major goal of a Lean system is to develop integrated networks of key stakeholders, which include customers, suppliers, and other groups. Integration facilitates the translation of customer and business requirements throughout an organization's supply chain. There are many ways to achieve supply-chain integration. First, all supply-chain participants should embrace Lean principles and create systems to eliminate NVA work activities from these systems. In this context, several enabling tools and methods will be discussed in this chapter, but at a basic level, Lean supply chains should use common metrics to identify process waste, make continuous improvements across organizational boundaries, provide visibility of demand for products and services, optimally allocate or position supply-chain assets, and increase their utilization efficiencies (measure of leanness). This must be done while simultaneously meeting all customer and stakeholder requirements.

Ideally, the IT systems of the supply-chain participants will also be integrated to provide visibility to supply-chain demand and capacity at all levels and in real-time. In addition, the collocation of supply-chain participants is important to minimize travel distance and to facilitate communication. Finally, contractual relationships should reflect participant cooperation. These are several integrative characteristics of a Lean supply chain.

The deployment of visual control systems is a fourth major goal of Lean systems. Visual systems can be used to monitor and manage the day-to-day work activities within a process workflow. In a manufacturing system, in which materials and information move from one work operation to another, visual means that metrics related to the past, current, and projected status of materials and information can be seen at a glance. A common situation is that performance measurements are displayed for everyone to see on a daily or even minute-to-minute basis. Visual displays have different formats. First, some are manual, whereas others are highly automated. Manual systems include using poster boards located within production areas to show production status or marking off floor space to identify where materials should be placed to be near their points of usage. Other common visual controls include using lights and warning buzzers to signal abnormal production conditions.

The goal of a visual control system is to quickly alert people to changes of process status. In highly automated systems, visualization is displayed using IT systems. An advantage of using this approach is that the IT system displays up-to-date information regarding the status of a product system. This information may also be gathered from geographically dispersed and disparate IT sources. In other words, all supply-chain participants will be able to easily see the demand on their portion of the system, available capacity, and the status of relevant work activities. Common examples include call centers that display operational metrics for facilities across the world, and airline and other transportation companies that identify asset status using radio frequency tagging or other IT platforms. Also, recall that Lean IT teams are managed using visual control systems. In this context, in Chapter 2, we discussed using an activity backlog and scrum sprints to provide visibility to a project's work activities. It was also recommended that project information describing the status of work activities be displayed using whiteboards with supporting documentation within a dedicated conference room. The review of a project's status at the end of a scrum sprint by customers and key stakeholders also facilitates the visual control of a project's work activities.

The fifth goal of a Lean system is to continually reduce waste. Continuous improvement depends on many supporting elements. These supporting elements include the systems discussed earlier in this section as well as others to be discussed later in this chapter. But at a basic level, improvement implies that effective process measurements exist and that an organizational infrastructure also exists to support and reward people for improving their products, services, and work processes. It should be noted that the activities associated with the management of IT projects within Lean systems also comprise a work process. To support waste reduction, people must be trained in the use of process improvement tools and methods such as Lean, Six Sigma, and APM with scrum, as well as key IT tools, methods, and concepts.

Seven Forms of Waste

Lean systems are deployed to increase the percentage of VA work activities within a process by reducing the seven common types or forms of process waste shown in Figure 2. These seven forms of process waste have analogues to the creation of products and services. The first type of process waste is the overproduction of work. If customer requirements should change, then producing work in advance of actual customer demand may result in wasted materials and labor. The impact of this type of waste can be seen as longer process cycle times and higher costs. In a Lean IT team, an example of overproduction would include producing software code in anticipation of customer needs or known requirements. A complicating impact of overproduction would be to over-utilize available resources for the creation of products or services in which demand does not occur. Overproduction has a significant impact on production operations because systems have limited capacity.

Seven major forms of waste.

Figure 2. Seven major forms of waste.

However, it should be noted that a relevant factor contributing to overproduction is the ability to quickly set up and move from one type of work activity or job to another. In other words, organizations are often forced by economic factors, related to limited capacity or high setup costs, to overproduce. This situation is more severe in some industries. Lean practitioners attempt to minimize or eliminate overproduction by matching available capacity to actual demand. The goal is to do work only when it is required and without overproducing. We will discuss this operational strategy later in this chapter relative to APM with scrum.

Waiting is a second form of process waste. When people wait for materials or information to do work, or if equipment is idle, process time is lost, and cycle time and production costs increase. There are many causes of waiting for materials, information, tools, equipment, or other resources. One major negative impact caused by waiting includes delays in moving production to downstream work operations. Relative to a project team, waiting waste occurs when team members are idle because they do not have the resources they need to start or finish their work.

Transportation waste occurs when information or materials are moved through several unnecessary intermediaries. Unnecessarily moving materials through a service system directly increases its cycle time and cost. Also, in highly automated systems, the impact may be exacerbated if unnecessary work operations are performed. Examples include doing a work task more than once due to rework or scrap, obtaining data extracts and analysis that are not needed, creating nonessential reports, or other situations where busy professionals are required to unnecessarily transfer materials or information between one or more work operations.

In contrast, information should be moved directly to where it is needed and not routed through several intermediate locations. An example would be eliminating several unnecessary management reviews of a project's work objects. In a project management sense, transportation waste occurs when team members must travel to see one another, or people and information are unnecessarily moved from one location to another. In summary, whenever unnecessary work, inspection, or storage locations are added to a process, transportation waste is created.

Inventory waste occurs when a work object not immediately needed by a customer has been produced. In this sense, it is also related to overproduction when materials or information are excess and cannot be used until the future. An example would be software code or other system functionality built in advance of customer or business needs. The risk in creating inventory is that customer requirements may change or the work may become damaged or lost. Inventory waste varies by industry with one of the most extreme situations being perishable items, such as food, that must be carefully stored otherwise they will rapidly deteriorate. However, information within a service system also has a limited shelf life. For example, if management reports are created but not used, then their value rapidly decreases from its initial level.

The best way to prevent inventory buildup is to carefully match demand to supply. However, this is not an easy task. It also becomes more difficult in systems that rely on forecasting models to estimate customer demand. As an example, it is common for a forecasting model to have an inherent percentage error between 5 percent to 25 percent or more of average unit demand. In a project management application, demand is directly related to various customer and stakeholder requirements and project schedule. Supply is represented by available resources, such as team members, support people, and equipment. A good strategy to match demand and supply is by assigning and balancing team resources using scrum sprints.

Unnecessary processing occurs as a result of several scenarios. First, unnecessary features and functions may be added to a product. This situation results in NVA work activities. The existence of unnecessary processing indicates that customer requirements have become disconnected from customer and key stakeholder needs and value expectations. Unnecessary processing increases the cycle time and cost of design and production processes when it occurs. Also, process complexity is increased. This may compound the problem by increasing the number of mistakes made during the production of products or services.

In a project management sense, any work activities not related to a project's activity backlog will result in unnecessary processing. Also, any requirements added to an activity backlog that have not been specifically requested by customers or key stakeholders as being necessary to satisfy the VOC or VOB will result in unnecessary processing. Unnecessary motion occurs when a specific work activity is not done efficiently. This situation will cause higher process cycle times and cost. Processing defects may also be created, which further decreases operational efficiency. There are several possible causes for this type of waste and several operational impacts. The best way to avoid unnecessary motion is to study work activities and their associated work tasks to determine the best way to do them day after day. This implies that each work task can be broken down into smaller and optimally sequenced work elements.

As part of this analysis, all the necessary work materials, information, tools, and training are provided to employees. This enables them to do their work in a way that minimizes physical effort and the variation of time caused by not using an optimum work method. In other words, unnecessary work will exist at an individual work task level if an inordinate amount of time is spent looking for tools and information. It also is created when employees do not follow standard work procedures.

The seventh process waste is process defects. Defects are caused if work products do not meet customer requirements. When defects occur work must be redone (i.e., reworked) or thrown away (i.e., scrapped). The result is higher cycle time and production cost, as well as lower customer satisfaction. Defects occur for many reasons. These include poor communication of customer requirements as well as their translation into specifications. Additional reasons include measurement errors, poor workmanship, and problems with incoming materials. In fact, there is a long list of causes of process defects.

Lean Tenets

The development of a Lean system is based on three major tenets: the existence of relatively stable external customer demand; the application of simplification, standardization, and mistake-proofing activities to stabilize operational systems; and continuous process improvement (Figure 3). These tenets are also called the pillars of a Lean enterprise. Stable external demand implies that the flow of work, through a production system, is smooth and its variation is predictable. Smooth implies that material or information flowing through a system is sequenced as a fairly regular pattern. Predictable implies that an organization can estimate external demand and match its available capacity to demand regardless of its growth or decline, its seasonality, and its natural random variation.

Lean tenets.

Figure 3. Lean tenets.

For example, in a stable production system such as automobile manufacturing, the magnitude of stable variation may be less than 10 percent of the average unit demand between each equivalent time period. Ideally, if the operational components of a system are properly matched to expected external demand patterns, then the work will be produced when, where, and in the quantity needed.

A direct analogue to this concept is a scrum sprint. A sprint is designed to produce discrete levels of a system's features and functions, based directly on customer requirements. This strategy helps to prevent the overproduction of work. For example, recall that at the end of a scrum sprint, customers and key stakeholders review recently created product features and functions. This feedback mechanism matches supply (team resources) to demand (VOC and VOB requirements).

Operational stability is developed through the many programs and improvement activities designed to ensure day-to-day work activities are efficiently performed. An important basis of operational stability is the effective design of products and services. This implies an alignment of customer and stakeholder requirements and their accurate translation into the specifications and design of products and services. This will tend to ensure higher value content using simple, standardized, and mistake-proofed designs. The efficient design of products and their associated production processes is a central reason for higher operational stability since simple and standardized designs will be easier to produce.

Also, the application of mistake-proofing strategies will tend to increase operational stability since defects will be eliminated. For example, software algorithms should also be designed simply, using standardized coding, and have mistake-proofing strategies applied. We will discuss this approach to software design in Chapter 6.

The third Lean tenet is that processes should be continually improved over time to increase the percentage of their value content. Continuous improvement activities depend on several factors. These include the development of high performance work teams; training team members to use appropriate tools and methods; and the creation of reward and recognition systems, which help align team members and their work activities with organizational goals and objectives. In summary, continuous improvement facilitates the identification of performance gaps and the deployment of project teams to improve product and service performance.


About the Author

Measuring and Improving Performance: Information Technology Applications in Lean Systems
From Measuring and Improving Performance: Information Technology Applications in Lean Systems by James William Martin. Auerbach Publications, 2009.

© Copyright 2009-2010 Auerbach Publications