Extended case examples show health systems responding to consumer needs and provider realities with equal efficiency and effectiveness, and improved quality and patient outcomes.
Further, contributors tackle the gamut of technological, medical, cultural, and business issues, among them: Initiatives of service-oriented architecture towards performance improvement Adapted lean thinking for emergency departments Lean thinking in dementia care through smart assistive technology Supporting preventive healthcare with persuasive services Value stream mapping for lean healthcare A technology mediated solution to reduce healthcare disparities Geared toward both how lean ideas can be carried out and how they are being used successfully in the real world, Lean Principles for Healthcare not only brings expert knowledge to healthcare managers and health services researchers but to all who have an interest in superior healthcare delivery.
Score: 5. Improving Production with Lean Thinking picks up where otherreferences on production processes leave off. With a practicalfocus, this book encompasses the science and analytical backgroundfor improving manufacturing, control, and design.
You're not sure what your teammates are working on, and management isn't helping. If your team is struggling with any of these symptoms, these four case studies will guide you to project success. See how Kanban was used to significantly improve time to market and to create a shared focus across marketing, IT, and operations. Each case study comes with illustrations of the Kanban board and diagrams and graphs to help you see behind the scenes.
Learn a Lean approach by seeing how Kanban made a difference in four real-world situations. You'll explore how four different teams used Kanban to make paradigm-changing improvements in software development.
These teams were struggling with overwork, unclear priorities, and lack of direction. As you discover what worked for them, you'll understand how to make significant changes in real situations.
The four case studies in this book explain how to: Improve the full value chain by using Enterprise Kanban Boost engagement, teamwork, and flow in change management and operations Save a derailing project with Kanban Help an office team outside IT keep up with growth using Kanban What seems easy in theory can become tangled in practice.
Discover why "improving IT" can make you miss your biggest improvement opportunities, and why you should focus on fixing quality and front-end operations before IT.
Discover how to keep long-term focus and improve across department borders while dealing with everyday challenges. Find out what happened when using Kanban to find better ways to do work in a well-established company, including running multi-team development without a project office.
You'll inspire your team and engage management to make it easier to develop better products. What You Need: This is a case study book, so there are no software requirements. The book covers the relevant bits of theory before presenting the case studies. Score: 4. The book provides practical knowledge for lean champions, managers, and executives driving toward operational excellence enterprise-wide.
The story format, and the presentation of this material was excellent, and the avoidance of lean and operational excellence jargon gives the book a wide appeal…it is a pleasure to read.
Written by Pascal Dennis, a leading Lean consultant, the story follows Tom Pappas and Rachel Armstrong, senior leaders at a desperate automotive company as they try to implement a Lean management system across an entire platform, the Chloe, a breakthrough "green" car. The future of the company is at stake. Any business serious about improvement is going to consider these methodologies in the overall scope of their operations and the unique benefits they bring to the table.
This book shows that for unbeatable sustained improvement they need to be intertwined with the Look Forward methodology.
With more than 50 combined years of change manage. Author : Vivian Y. Chapters provide an overview of LCA and how it can be used in conjunction with other indicators to manage construction. Topics covered include indoor environment quality, energy efficiency, transport, water reuse, materials, land use and ecology, and more. The book presents a valuable tool for construction professionals and researchers that want to apply sustainable construction techniques to their projects.
Practitioners will find the international case studies and discussions of worldwide regulation and standards particularly useful. Provides a framework for analyzing sustainable construction technologies and economic viability Introduces key credit criteria for different sustainable construction technologies Covers the most relevant construction areas Includes technologies that can be employed during the process of construction, or to the product of the construction process, i.
The 58 full papers presented were carefully reviewed and selected from numerous submissions. Author : Brian J.
Lean Performance ERP Project Management integrates strategy, people, process, and information technology into a project management methodology that applies Lean thinking to all processes.
It uses Lean princ. Author : Gerald M. Taylor Publisher: J. Author : William K. It supplies a unifying framew. The book deepens the debate about the lean enterprise from both an academic and a professional management perspective. It thus provides the reader with a sound understanding of the modern lean enterprise and its current evolution. A range of innovative topics are covered, with individual chapters addressing the combinations of lean with hoshin kanri, green management, IT, organizational learning, flow accounting, system thinking, problem solving, internationalization aspects, luxury industry, and product innovation.
It has reshaped the support functions of manufacturing businesses and has evolved from private industry into the public sector. Lean thinking is now a dominant model of operations management and has brought with it a new language and toolbox. Author : Torbjorn H. This is the first volume to provide an academically rigorous overview of the field of lean management, introducing the reader to the application of lean in diverse application areas, from the production floor to sales and marketing, from the automobile industry to academic institutions.
The volume collects contributions from well-known lean experts and up-and-coming scholars from around the world. The chapters provide a detailed description of lean management across the manufacturing enterprise supply chain, accounting, production, sales, IT etc. The contributors address challenges and opportunities for future development in each of the lean application areas, concluding most chapters with a short case study to illustrate current best practice.
This handbook is an excellent resource for business and management students as well as any academics, scholars, practitioners, and consultants interested in the "lean world. Author : Robert M. In this culture, project teams will prepare their work in task packages and enable workflow necessary to leave inefficiency of time and resource, literally, no place to hide.
Project examples will help teams implement the principles that shorten cycle times, eliminate error, improve quality and reduce costs to succeed in meeting project commitments. Emerging Lean enterprise relationships between clients, EPC contractors and their entire supply chain will advance what constitutes the new, market-differentiating performance of individuals, project teams and companies - justifying high levels of trust and inter-organizational efforts to improve.
Client executives will learn to recognize root causes of risk and sources of excellence to mitigate them. Well-developed strategic improvement is often constrained because the traditional way - current means and methods - fit squarely in everyone's comfort zone. By learning to ask the right questions, top-client leadership will soon render overruns from the best traditional systems as "not-good enough" and strive for a new level of excellence.
EPC executives will better engage creative voices from their best resources and stakeholders to resolve all concerns and define a unified vision for how to deliver on clients' expectations without overruns during capital project delivery. Lean methods will effectively assure that vision, principles and best expectations are understood and implemented at the workface.
Department, discipline and stakeholder leaders will align and no longer frustrate each other and their clients. They will plan and execute with increased efficiency and effectiveness. Cost reduction will accelerate, retaining only client-valued quality - enabling a nimble response to market opportunities and threats.
Project and program managers will confidently accept intense, market-induced cost and schedule-reduction efforts. The Antidote to Stagnation Lean thinking is not just the antidote to muda in some abstract sense; the performance leap just described is also the answer to the prolonged eco- nomic stagnation in Europe, Japan, and North America.
Conventional thinking about economic growth focuses on new technologies and addi- tional training and education as the keys. Thus the overwhelming emphasis of current-day popular writing on the economy is on falling computing costs and the growing ease of moving data around the planet, as exemplified by the World Wide Web.
Coupling low-cost, easily accessible data with interactive educational software for knowledge workers will surely produce a great leap in productivity and well-being, right? During the past twenty years we've seen the robotics revolution, the materials revolution remember when cars would have ceramic engines and airplanes would be built entirely of plastic?
The problem is not with the new technologies themselves but instead with the fact that they initially affect only a small part of the economy. A few companies like Microsoft grow from infants to giants overnight, but the great bulk of economic activity—construction and housing, transport, the food supply system, manufacturing, and personal services—is only affected over a long period.
What's more, these activities may not be affected at all unless new ways are found for people to work together to create value using the new technologies. Yet these traditional tasks comprise 95 percent or more of day-to-day production and consumption. Stated another way, most of the economic world, at any given time, is a brownfield of traditional activities performed in traditional ways.
New technologies and augmented human capital may generate growth over the long term, but only lean thinking has the demonstrated power to produce green shoots of growth all across this landscape within a few years. And, as we will see, lean thinking may make some new technologies unnecessary. The continuing stagnation in developed countries has recendy led to ugly scapegoating in the political world, as segments of the population in each country push and shove to redivide a fixed economic pie.
Stagnation has also led to a frenzy of cost cutting in the business world led by the reengi- neers , which removes the incentive for employees to make any positive contribution to their firms and swells the unemployment ranks. Lean think- ing and the lean enterprise is the solution immediately available that can produce results on the scale required. This book explains how to do it. Getting Started Because lean thinking is counterintuitive and a bit difficult to grasp on first encounter but then blindingly obvious once "the light comes on" , it's very useful to examine the actual application of the five lean principles in real organizations.
The material in the remainder of Part I, therefore, provides real instances of lean principles banishing muda. The place to start, as always, is with value as defined by the customer. Doyle Wilson of Austin, Texas, had been building homes for fifteen years before he got serious about quality.
Such a large part of my business was waiting and rework, with expensive warranty claims and friction with customers, that I knew there must be a better way. Then I stumbled across the quality movement. Edwards Deming. Doyle Wilson is the archetypical Texan and never does things halfway.
Over the next three years he personally taught his workforce the principles of TQM, began to collect and analyze enormous amounts of data on every aspect of his business, got rid of individual sales commissions "which destroy quality consciousness" , eliminated the traditional "builder bonus" for his construction superinten- dents who were qualifying for the "on-time completion" bonus by making side deals with customers on a "to-be-done-later" list , reduced his contrac- tor corps by two thirds, and required the remaining contractors to attend and pay for his monthly quality seminars.
Customer surveys showed a steady rise in satisfaction with the home- building experience and sales grew steadily even in a flat market as Wilson took sales from his competitors. Yet he was not satisfied. I've been making progress in increasing my share of the 22 percent seeking a new home, but what about the 78 percent who bought older homes? Obviously, these buyers are the real market opportunity. What he discov- ered was obvious in retrospect but has required a complete rethinking of his business.
Specifically, he found that many buyers of older homes hated the "hassle factor" in negotiating for new construction, the long lead times to get the job done and move in, the inevitable "to-be-done" list after moving in, and the "phony choices" available from builders who promise custom homes but then load on as "standard equipment" many features of little interest to buyers.
Wilson soon realized that that was exacdy what he had been asking his customers to go through. By contrast, older-home customers could clearly see what they were getting, buy only what they wanted, and, often, move in immediately. H e has recently opened a one-stop sales center where the customer can see and decide on every option available in a house for example, the forty different varieties of brick, the three thousand varieties of wallpaper, the four styles of built-in home office , customize a basic design with the help of an Auto-Cad computer system, select features beyond the standard level for example, extra-thick carpet pads, additional outdoor lighting, and heavier-duty wiring , determine the exact price, work out the mortgage, arrange for insurance, and arrange for the tide search.
For cus- tomers truly in a hurry this can be done during one walk-through of the sales center. To shrink the lead time from contract signing to moving in from six months to a target of thirty days, he has reorganized his contract-writing and job-release process and is developing a system of pull scheduling for contractors who are assigned new jobs as downstream jobs are completed.
He is also introducing standardized work statements, parts lists, and tool kits for every job. Eventually these steps will eliminate the "to-do" list because the new system does not allow the next task to start until the previous task is certified as complete with perfect quality.
Doing all of this will not be easy, as we'll see when we return to this example in Chapter 3 on flow, but Doyle Wilson has already made the key leap. Instead of concentrating on conventional markets and what he and his contractors were accustomed to making in a conventional way, he has looked hard at value as defined by his customers and set off down a new path. Start by Challenging Traditional Definitions of "Value" Why is it so hard to start at the right place, to correctly define value?
Partly because most producers want to make what they are already making and partly because many customers only know how to ask for some variant of what they are already getting. They simply start in the wrong place and end up at the wrong destination.
Then, when providers or customers do decide to rethink value, they often fall back on simple formulas—lower cost, in- creased product variety through customization, instant delivery—rather than jointly analyzing value and challenging old definitions to see what's really needed. Steve Maynard, vice president for engineering and product development at the Wiremold Company in West Hartford, Connecticut, was trying to deal with these very problems when he reorganized Wiremold's product development system in For many years previously, Wiremold had developed new products—consisting of wire guides for office and industrial users and surge protectors for PCs and other business electronics—through a conventional departmentalized process.
It started with marketing, which commissioned surveys comparing Wiremold's products with the offerings of competitors. When an "opportunity" was identified, usually a gap in the market or a reported weakness in a competitor's offering, a design was developed by product engineering, then tested by the prototype group.
If it worked according to specification, the design proceeded to the engineers designing the machines to make the products and eventually went into production.
This system produced designs which lacked imagination and which cus- tomers often ignored. The designs also took too much time and effort to develop and cost too much to make, but these are a different type of problem we'll discuss in Chapter 3.
Simply speeding up this process through simulta- neous engineering and then broadening product variety would just have brought more bad designs to market faster. Pure muda. Instead, the customer and the producer Wiremold focused on the value the customer really needed.
For example, traditional Wiremold wire guides which channel wiring through hostile factory environments and provide complex arrays of outlets in high-use areas like laboratories and hospitals had been designed almost entirely with regard to their ruggedness, safety, and cost per foot as delivered to the construction site. This approach nicely matched the mentality of Wiremold's product engineers, who dominated the development process and who found a narrow, "specification" focus very reassuring.
As the new dialogue began, it quickly developed that what customers also wanted was a product that "looked nice" and could be installed at the construction site very quickly. Wiremold had never employed a stylist and knew relatively little about trends in the construction process. Customers were willing to make substantial trades on cost per foot to get better appear- ance which increased the bid price of construction jobs and quicker instal- lation which reduced total cost.
Within two years, as all of Wremold's product families were given the team treatment, sales for these very conventional products increased by more than 40 percent and gross margins soared.
Starting over with a joint customer-producer dialogue on value paid a major dividend for Wiremold quite aside from savings in product development and production costs. While Wiremold and Doyle Wilson Homebuilder and every other firm needs to be searching for fundamentally new capabilities that will permit them to create value in unimagined dimensions, most firms can substantially boost sales immediately if they find a mechanism for rethinking the value of their core products to their customers.
Define Value in Terms of the W h o l e Product Another reason firms find it hard to get value right is that while value creation often flows through many firms, each one tends to define value in a different way to suit its own needs. When these differing definitions are added up, they often don't add up.
Let's take another nightmarish but completely typical travel example. One of us Jones recendy took his family on an Easter holiday in Crete from his home in Herefordshire in the United Kingdom. The trip was reasonably routine but look at what the Jones family did to "process" itself through the system: 1. Call the travel company to make the booking. Receive the tickets by mail.
Call the taxi company to make the booking. Wait for the taxi. Load the luggage A. Drive to the airport three and a quarter hours , arriving two hours before the scheduled flight time as required by the airline.
Unload the luggage. Wait in the currency exchange queue to change English pounds into Greek drachma. Wait in the check-in line. Wait in the security line. Wait in the customs line.
Wait in the departure lounge. Wait in the boarding line. Wait in the airplane two-hour air-traffic delay. Taxi to the runway. Fly to Crete three hours. Wait in the airplane taxi and deboarding. Wait in the baggage-claim line. Wait in the immigration line. Load luggage onto the bus. Travel by bus to the villa almost forty-five minutes. Unload luggage and carry to villa. Wait to check in at the villa P.
The box score: Total travel time: 13 hours Time actually going somewhere: 7 hours 54 percent of the total 3 Queuing and wait time: 6 hours Number of lines: 10 Number of times luggage was picked up and put down: 7 Number of inspections all asking the same questions : 8 Total processing steps: 23 The problem here is not that there were too many firms involved.
Each was appropriately specialized for its current task. The problem instead is that each firm was providing a partial product, often only looking inward toward its own operational "efficiency" while no one was looking at the whole product through the eyes of the customer. The minute the focus is shifted to the whole as seen by the customer, obvious questions emerge: Could one person at check-in handle the security, customs, and check-in tasks?
Letting you walk past them into the boarding area or even onto the plane. Better yet, could the ticket sent by your travel agent include your baggage tags, boarding passes, taxi voucher, bus tickets, and villa registra- tion, so you just drop these off as you walk through each point? Or perhaps travelers could create their own ticket using their personal computer linked to reservations systems.
They could simply swipe their credit card through a card reader at each point, eliminating paperwork altogether along with the travel agent. Could the customs authorities in Crete have your passport scanned at check-in in London and use the hours you are en route to figure out whether you ought to be admitted? Then, unless there is a problem, you could just walk off the plane without visiting immigration and customs at all.
And why does anyone know? In short, the appropriate definition of the product changes as soon as you begin to look at the whole through the eyes of the customer. Doing this will generally require producers to talk to customers in new ways and for the many firms along a value stream to talk to each other in new ways. We'll see many more examples of this need in the pages ahead—for example, the need for car companies to stop selling a product and car dealers to stop selling services, both to be replaced by a new product [personal mobility] provided jointly to the user.
It's vital that producers accept the challenge of redefinition, because this is often the key to finding more customers, and the ability to find more customers and sales very quickly is critical to the success of lean thinking. This is because lean organizations, as we will demonstrate shortly, are always freeing up substantial amounts of resources. If they are to defend their employees and find the best economic use for their assets as they strike out on a new path, they need to find more sales right now.
Beginning with a better specification of value can often provide the means. Then, once the initial rethinking of value is done in what might be called kaikaku for value , lean enterprises must continually revisit the value question with their product teams to ask if they have really got the best answer. This is the value specification analog of kaizen which seeks to con- tinually improve product development, order-taking, and production activi- ties.
It produces steady results along the path to perfection. The Final Element in Value Definition: The Target C o s t The most important task in specifying value, once the product is defined, is to determine a target cost based on the amount of resources and effort required to make a product of given specification and capabilities if all the currently visible muda were removed from the process. Doing this is the key to squeezing out the waste.
Conventional firms set target selling prices based on what they believe the market will bear. They then work backwards to determine acceptable costs to ensure an adequate profit margin, and they must do this any time they begin to develop a new product. So what's different here? They effectively ask, What is the j a muda-fxtt cost of this product, once unnecessary steps are removed and f value is made to flow? This becomes the target cost for the development, order-taking, and production activities necessary for this product.
Once the target cost is set for a specific product, it becomes the lens for examining every step in the value stream for product development, order-taking, and production this latter being called operations in the case of a service like insurance or transportation.
As we will see in the next chapter, the relendess scrutiny of every activity along the value stream— that is, asking whether a specific activity really creates any value for the customer—becomes the key to meeting the aggressive cost target. Not only does the flow of the physical product culminate in the supermarket aisle, as pulled forward by the decisions of the shopper, but also the process of product development as new products are launched.
Indeed, Taiichi Ohno found this vantage point in the modern supermarket so stimulating that it inspired him in to invent the new system of flow management we now call Just-in-Time JIT. To do this we have started to map out every step—each individual action—involved in the process of physical production and order-taking for specific products. Recently we have started to think about product develop- ment as well.
Our method is based on a simple premise. Just as activities that can't be measured can't be properly managed, the activities necessary to create, order, and produce a specific product which can't be precisely identified, analyzed, and linked together cannot be challenged, improved or elimi- nated altogether , and, eventually, perfected.
The great majority ofmanage- ment attention has historically gone to managing aggregates—processes, departments, firms—overseeing many products at once. Yet what's really needed is to manage whole value streams for specific goods and services. We are grateful for his help. Once this third set has been removed, the way is clear to go to work on the remaining non-value-creating steps through use of the flow, pull, and perfection techniques described in the chapters ahead.
The Value Stream for a Carton 3 of Cola The only way to make this method clear is to describe a typical value stream analysis. We should, however, tell you at the outset that what we will find is fairly horrific—a lengthy set of actions extending over three hundred days, most of which consume resources but create no value and are therefore muda.
You should understand that looking at any of the thirty thousand other items in the typical Tesco store would produce very much the same result. The cola example is neither better nor worse than the norm. You should also bear in mind that the firms arrayed along the cola value stream are all competendy managed in terms of mass-production thinking. The problem is not the competence of managers operating the system in accord with an agreed logic.
The problem is the logic itself. Producing Cola Even the mightiest river has modest headwaters. For cola one of these is literally water, supplied in the United Kingdom by the local Water Authori- ties. Other basic ingredients are the "essence" in plain language, the taste used in tiny amounts and supplied as a concentrate by the parent cola company,5 beets for sugar, corn for caramels to provide the "cola" color and additional taste , fir trees for cardboard to make the carton, and bauxite or recycled cans to create aluminum for the can.
As shown in the value stream map in Figure 2. Although the ore could in principle be mined in small amounts and sent along to the next step within a few minutes of the receipt of an order, the mining machinery is truly massive and the actual process involves scooping out millions of tons of bauxite at a go in accord with a long-term production forecast.
T h e mountain of ore is then transferred to massive trucks for shipment to a nearby chemical reduction mill where the bauxite is reduced to powdery alumina. When enough alumina is accumulated to fill an ultralarge ore carrier over two weeks or so; about , tons or enough for 10 million cans , it is shipped by sea—a four-week trip—to Norway or Sweden, countries with cheap hydroelectric power, for smelting. After about a two-month wait at the smelter, the application of an enor- mous amount of energy twenty times that needed to melt down and recycle old cans reduces two tons of alumina to one ton of aluminum in about two hours.
Again, scale in smelting dictates that large amounts of aluminum be created in each batch, with the molten aluminum poured into dozens of ingots one meter on each side and ten meters long.
After about two weeks of storage at the hot rolling mill, the ingot is heated to five hundred degrees centigrade and run through a set of heavy rollers three times to reduce the thickness from one meter to three millime- ters. The actual rolling process takes about one minute, but the machinery is extremely complex and difficult to change from one specification of prod- uct to another, so management has found it best to wait until there are orders in hand for a large amount of material of a given specification and then to process these orders all at once.
When this is done for the specifica- tion of aluminum needed for cola cans, the aluminum sheet emerging from the rolling mill is wound onto a ten-ton coil and taken to a storage area, where it sits for about four weeks. When needed for the next step, the coil is taken from storage and shipped by truck to a cold rolling mill, either in Germany or Sweden, where it is stored for about another two weeks.
Cold rolling at feet of aluminum sheet per minute—about 25 miles an hour squeezes the aluminum sheet from 3 millimeters to. Because the cold rolling equipment is also extremely expensive and difficult to change over to the next product, the managers of the cold rolling mills have also found it most economical to accumulate orders for products of a given specification and do them all at once.
The thin sheet emerging from the cold roller is then slit into narrower widths, wound onto ten-ton coils, and stored for about a month on average. When needed for can making, the aluminum coils are shipped by truck, by sea, and again by truck to the can maker in England, where the coils are unloaded and stored, again for about two weeks.
When needed, the coils are taken from storage to the can making machinery and run through a blanking machine which punches circular discs out of the aluminum sheet at the rate of four thousand per minute.
The discs are then fed automatically into "wall drawing" machines, which punch the disc three times in succession to create a can without a top, at the rate of three hundred cans per minute per machine. Thirteen forming machines are downstream from each blanking machine. From the forming machines, the cans travel by conveyor through a washer, a dryer, and a paint booth applying a base coat and then a top coat consisting of the cola color scheme plus consumer information in different languages and varying promotional messages.
The cans then travel through lacquering, necking and flanging to prepare the cans to receive their tops after filling , bottom and inside spraying to prevent discoloration and any aluminum taste from getting into the cola , and on to final inspection. However, it is also extremely expensive to change over from one type of can to the next and one paint scheme to the next, so management tries to produce large lots of each type. From the can maker's standpoint this is clearly the most economical approach, and it also meshes with the practice of the smelter, hot roller, and cold roller of processing specific types of aluminum in large batches.
After inspection, the cans proceed to an automated palletizing machine which loads the empty cans on pallets, eight thousand to each pallet, and sends them to a massive warehouse for storage until needed, usually four weeks.
In the warehouse, they are stored by type of can because the bottling firm eventually filling the cola cans needs a variety of cans with different labels for beverages besides plain cola for example, diet cola, caffeine-free cola, cherry cola.
And even for plain cola, the bottler must support many different packaging configurations and promotional campaigns. Each pack- age and many marketing campaigns require different information to be painted on the cans.
They are then depalletized and loaded into massive can filling machines, where they are washed and filled. It is at this point that the major tributary streams converge in a massive tank adjacent to the filling machine.
In this step, water, caramels, sugar, and essence are carefully mixed, and carbon dioxide the fizz is added to create cola. Figure 2. The value streams for these items also require detailed analysis by Tesco, the bottler, and their suppliers, but the method for value stream analysis is best illustrated by sticking to the longest stream.
After the cola is poured into the cans at the rate of fifteen hundred cans per minute , the cans are sealed with an aluminum can end containing the familiar "pop top," supplied through a separate but very similar process by the can maker.
The cans are then date stamped and packed into cartons of varying numbers of cans, eight in the present case. Each type of carton has its own paint scheme and promotional information.
The mixing and filling process, which brings all of the tributary value streams together, requires only one minute to proceed from washing to packing, but it is expensive and time-consuming to change over. In addition, putting cola in a few cans and then a clear soda in the next can requires purging the whole fill system, so the bottler has found it most economical to run large lots of each type of beverage through its complex equipment.
A process called "stocking. Once at the Tesco warehouse things move much faster. Incoming pallets are stored for about three days before cases are taken from the pallets and placed in roll cages going overnight to each store. Once at the retail store, the roll cages are taken from the receiving dock to a storage area in the rear or direcdy to the shelves, and the cola is sold in about two days. When the cola is taken home it is typically stored again, at least for a few days, perhaps in the basement if the shopper has bought a number of cartons to take advantage of a special promotional offer.
Then it's chilled and, finally, consumed. The last stepprobably requires about five minutes, after nearly a sear along the stream. A final important step, also shown in Figure 2. Currendy, only 16 percent of aluminum cans in the U. If the percentage of cans recycled moved toward percent, interesting possibilities would emerge for the whole value stream. These activities would suddenly convert from type 1 in our typology—muda but unavoidable—to type 2—muda that can be completely eliminated right away.
The slow acceptance of recycling is surely due in part to the failure to analyze costs in the whole system rather than just for the recycling step in isolation. When laid out this way, action by action, so it's possible to see every step for a specific product, the value stream for physical production is highly thought- provoking. First, as shown in Table 2.
More than 99 percent of the time the value stream is not flowing at all: the muda of waiting. Second, the can and the aluminum going into it are picked up and put down thirty times. From the customer's standpoint none of this adds any value: the muda of transport. Similarly, the aluminum and cans are moved through fourteen storage lots and warehouses, many of them vast, and the cans are palletized and unpalletized four times: the muda of inventories and excess processing.
Finally, fully 24 percent of the energy-intensive, expensive aluminum coming out of the smelter never makes it to the customer: the muda of defects causing scrap.
TABLE 2. DC 0 0 3 days — 8 24 Tesco store 0. The jump in scrap at the can maker is due to the loss of about 14 percent of the material in the punch. The loss at the bottler is mainly from damaged cans rejected as they are loaded in the filling machinery. Because the cans are stored empty with no internal pressure, they are easy to damage in handling.
The jump in scrap rate at the home of the customer, shown in brackets, is the consequence of recycling only 16 percent of the 76 percent of the original aluminum which reaches the customer. The boats, warehouses, and processing machines we have been describing are truly massive and we can see that the primary objective of technologists in the beverage industry has been to scale up and speed up this equipment while removing direct labor, in a classic application of the ideas of mass production.
Indeed, this machine may be much more expensive than a smaller, simpler, slower one able to make just what the next firm down the stream needs Tesco in this case and to produce it immedi- ately upon receipt of the order rather than shipping from a large inventory.
For the moment, let's just reemphasize the critical leap in embracing value stream thinking: Stop looking at aggregated activities and isolated machines —the smelter, the rolling mill, the warehouse, and the can filling machine. Start looking at all the specific actions required to produce specific products to see how they interact with each other. Then start to challenge those actions which singly and in combination don't actually create or optimize value for the customer.
Ordering Cola If it takes days to bring a cola from bauxite to Tesco and a similar amount of time to make most of the other items along Tesco's aisles , there is a clear problem in ordering. Either orders must be completely uniform over time so the producers all along the stream can operate stable schedules with litde inventory, or the upstream producers must maintain large inven- tories at every stage to deal with shifts in demand, or Tesco's customers must learn to live with shortages.
None of these is desirable because all create muda. It has dramatically reduced "stock-outs" a situation of not having a product the customer wants while also slashing its own in-store and warehouse inventories by more than half. Because Tesco was already one of the most efficient grocers in the world when it started this process, it appears that its current inventories are only half the U.
However, Tesco has recently realized that to move even further in reduc- ing inventories, stock-outs, and costs on a total system basis where more than 85 percent of the costs of a typical product like cola are outside Tesco's corporate control , it -will need to improve responsiveness and ordering accuracy all the way up its value stream, running across seven firms in this particular case. Tesco installed a Point-of-Sale POS bar-code scanningjsvstem in the checkout lanes of all of its stores in the mids.
This permitted each store to maintain a "perpetual inventory" of exactly how much of every item it had on hand and to make more accurate orders to suppliers. This was possible because every time a customer in the aisle took a carton of cola past the checkout, the system noted this fact along with the recent rate of sales and the number of cartons remaining.
Replenishment orders could be auto- matically generated. A few years later, Tesco transferred decision making on what each store would purchase and when from the store manager, who had been ordering direct from each supplier, to a centralized system where Tesco placed orders combined from all stores to suppliers. At the same time, it opened a dozen Regional Distribution Centers RDCs in England so that suppliers for more than 95 percent of all sales volume the exceptions being milk, sugar, and bread would ship to the RDC rather than the store.
Instead of sending a small truck, partially loaded, to each store, each supplier could send a large truck to each RDC and Tesco could send another large truck to the retail store each night.
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