Audit : Benchmarking with 20 points lean manufacturing

How to conduct a benchmarking audit
using the 20 keys of Lean Manufacturing
by Joerg Muenzing on 30th August 2012
Introduction
Lean factories are fast, flexible, and efficient.
They work like non-stop conveyor belts,
producing a steady stream of quality goods at
the rate of customer demand. Implementing
lean practices have become critically
important to maintain profitability and
competitiveness. Benchmarking “leanness”
defines baseline and identifies improvement
potentials. A lean audit must cover all 20 Keys
of Lean Manufacturing to produce a
meaningful result.
Assessing the 20 Keys of Lean
Manufacturing
Key-01: 5S-Organization
A high degree of organisation and cleanliness
is the foundation of all major improvement
programs.The lean organisation metric
assesses how well the operation is organised
based on 5S principles: ‘Defining a place for
everything and putting everything on its place’.
To effectively measure 5S, the auditor needs
to review 5S audit frequency, 5S knowledge
level, cleanliness, robustness of housekeeping
process, degree of standardisation,
organisational system approach, and how
often items are reviewed and marked, the
tagging frequency. 5S is essential to lean; it
promotes safety and efficiency, defines
structure, and eliminates waste from
searching.
Key-02: Autonomation
The lean autonomation metric assesses the
‘Jidoka’ dimension, the ability of machines to
work without human supervision. Jidoka is also
referred to ‘intelligent automation’,
continuously monitoring quality to prevent
defects. To assess Jidoka, the lean auditor
looks at the capability of quality detection,
degree of employee empowerment, simplicity
of man-machine interface, amount of
monitoring, effectiveness of error-proofing,
and versatility of skills to handle multiple
machines.
Key-03: Development
People development is integral part of human
capital management (HCM); also referred to
as talent management. To benchmark
leanness, the auditor seeks to understand how
well people are trained and prepared for their
future roles in the organisation. It means
assessing robustness of skill
assessment,quality of appraisals,
effectiveness of coaching and feedback, how
training is initiated and delivered,the breadth
of training program, quality of certification
process, and how well career development is
executed.
Key-04: Efficiency
Efficiency refers to the ability to deliver goods
and services that meet customer requirements
and produce economic value. To benchmark
leanness, the auditor reviews conservation
level, functional coverage and strategic
alignment of efficiency improvements,
effectiveness of controls, capability of costing
model, quality of efficiency measurements,
overhead application approach, effectiveness
of waste reduction, and overall business
value-add.
Key-05: Flow
A lean factory produces a steady stream of
quality goods on time. Continuous flow refers
to producing and moving one single item at a
time, eliminating overproduction, inventory,
and slack in the system. To determine the
level of flow, the auditor assesses the typical
batch-size, degree of one-piece-flow achieved,
changeover time, delivery performance
relative to market expectations, inventory
between stations, and synchronisation
between processes
Key-06: Inventory
Inventory refers to all items in the pipeline
waiting to be processed or moved. Physical
inventories include raw materials, work-in-
process, and finished goods. They are used as
buffer stocks, safety stock, and shipping
stocks.Benchmarking leanness means
analysing how well parts and information are
managed. The lean auditor looks at the
amount of inventory relative to sales, safety
stocks, reorder points, level of control, how
overproduction is addressed, method of
replenishment, degree of inventory
separation, and sequence of withdrawal.
Key-07: Involvement
Nothing can be achieved without involvement;
it refers to emotional attachment of people to
their work, team, and environment. Measuring
the degree of involvement is important, as it
correlates to a high degree with the
performance delivered. The lean auditor
analyses the alignment between management
layers, how improvements are initiated,
strength of resource commitment, integration
of customers and suppliers in the value chain,
and robustness of the business improvement
process.
Key-08: Layout
A lean layout supports people and machines to
perform their work in a safe and efficient way.
Applied lean techniques improve flow, reduce
waste, and optimise interactions between
humans, machines, systems, and operating
environment. To benchmark layout leanness,
the auditor assesses interactions between
operators, amount of inventory between
stations, time to fetch parts and information,
level of transparency within the plant, and
effectiveness of walk-pattern. An ideal plant
has no dividing walls, enabling managers to
overlook the entire flow from receiving to
shipping.
Key-09: Levelling
The lean levelling metric assesses the
‘Heijunka’ dimension; how well the operation
is balanced to produce at a constant and
predictable rate. Besides flow, takt, and pull,
levelling is one of the four pillars of a lean
production system.The level of balancing can
be determined by the backlog in the system,
method of scheduling, how the plant is
configured relative to levelling, and average
workload variations. Assuming capital- and
labor linearity, improvements in balancing
translate directly into bottom line savings.
Key-10: Maintenance
A well running factory produces goods in a
continuous flow at zero downtime. The ability
of machines to run without interruptions
correlates to maintenance effectiveness. A
lean factory audit should evaluate the
reliability of machines, overall operating
efficiency (OEE), and effectiveness of
maintenance organisation, the ratio between
planned and unplanned downtime,
maintenance system approach, and method of
uptime control. Improving uptime becomes
increasingly important when demand
approaches capacity.
Key-11: Management
People and machines can only perform when
properly managed. Performance management
covers the entire plan-do-check-act cycle
(PDCA); it defines expectations, sets targets,
measures baseline, identifies gaps and
opportunities, defines actions, allocates
resources, and executes the plan to achieve
targets. When benchmarking lean, the
assessor evaluates the performance
management process, type of parameters
tracked, quality of goal setting, effectiveness
of decisions, feedback, impact of incentive
system, and effectiveness of consequences
management. Managing performance is
critical to any achievement.
Key-12: Pull
Overproduction and excess inventory are the
result of producing in push mode. Push is
commonly used in traditional manufacturing,
while pull is a characteristic of lean
production. To benchmark leanness, we need
to review how resources are planned,
triggered, and consumed. Pull eliminates
overproduction by strictly producing what is
demanded by the next process. Pull is one of
the three pillars of a just-in-time (JIT)
system.Auditing pull means scoring how well
the production rate is synchronised with actual
customer demand, amount of overproduction,
performance of replenishment process,
withdrawal method and discipline, and type of
resource planning system in use.
Key-13: Quality
Quality means ‘fitness for purpose’, how well
products and services meet market
expectations.To audit lean performance, we
determine the overall quality level by
assessing process capability, Sigma level,
effectiveness of quality controls, reliability
and usefulness of quality data, how non-
performance cost (NPC) is managed;authority
of quality managers, maturity or the quality
system, and strategic importance of quality
within the organisation. Quality is defined by
the customer, not by the company.
Key-14: Rationalising
Rationalising means leveraging existing
possibilities to improve productivity.
Continuously raising productivity is essential
to maintain healthy margins throughout the
economic lifecycle. The lean auditor reviews
the practical application of knowledge to
improve efficiency, coordination of resources,
and operating controls. The ability to
rationalise is determined by the chosen
approach to improve productivity, degree of
automation, quality of improvement ideas,
degree of supplier integration, penetration of
information technology, and capability of site
technology.
Key-15: Readiness
Readiness refers to the ability to adapt to
shifts in customers’ preferences, advances in
technology,and changes in the competitive
landscape. Managing change is absolutely
critical to the individual, team, and
organisational success. Lean drives continuous
improvement which demands constant change.
Benchmarking lean requires assessing general
awareness, spirit and readiness of people,
their ability to adapt to change, attachment to
the status quo, sense of urgency, involvement
of senior management, quality of leadership,
ownership of change projects, and
effectiveness of execution.
Key-16: Response
A managed response protects critical assets
from hazards and ensures continuance of the
operation.A lean operation demands quick and
effective responses, because no inventory
buffers are in place to protect from outages,
shortages, downtimes, and slow responses.
When benchmarking lean, we need to review
how the organisation addresses abnormalities,
how well plans are executed, authority of
operators, speed and effectiveness of
responses, tracking line-down events,
signalling of abnormalities, and type of events
that trigger a response.
Key-17: Solving
Problem solving refers to moving from a given
state to a desired goal state, from problem to
solution.To pursuing lean, we need to raise
targets above current capability levels,
causing pain and problems. The ability to
address those problems and close
performance gaps is part of lean
benchmarking; assessing the quality of
abnormality detection, effectiveness of
problem solving approach, focus of managers,
degree of operator involvement, problem
solving knowledge, quality of solutions, speed
of implementation, and effectiveness of
problem solving system.
Key-18: Standards
Standards capture current best practices, the
‘right way to work’, and establish a baseline
for further improvement. The ‘Act’ phase of
the PDCA improvement cycle is all about
translating improvements into
standards.Standards enable systems and
systems are impossible without the references
provided by standards. Lean benchmarking
means analysing the entire workflow, degree
of standardisation, accessibility of standards,
content and controls, how well procedures
cover plant and office processes, and methods
applied to keep standards relevant and up-to-
date.
Key-19: Takt
Takt is referred to the rate of customer
demand. Takt time is used to set the pace of
lean factories, while traditional factories work
to schedules and forecasts. Takt, flow, pull,
and levelling are the four pillars of a lean
production system. Therefore, assessing takt
synchronisation is important to lean
benchmarking. The auditor evaluates how well
the pace of production is controlled and
tracked, method of adjustment, how well
rhythm and discipline is established, and how
close the operation is synchronised to actual
market demand.
Key-20: Visuals
Visual management is faster, cheaper, and
much more effective than any other type of
management system. Visuals enable people to
operate without papers and computers. Visual
devices relay information through signals
instead instructions; they use Kanban cards,
Andons, bins, containers, etc. Such visuals are
used in lean production systems to improve
speed and efficiency. When scoring leanness,
we need to review the range of visual tools in
use, effectiveness of controls, how well
processes and inventory are visually
controlled, and the degree of transparency
within plant and office.
Benchmarking Factory Leanness
Score the 20 Keys of Lean Manufacturing to
benchmark your factory on a five-point rating
scale: