Lean vocabulary can be a bit confusing when you are just starting out. Lean is filled with all sorts of terms and words with various meanings. Understanding some of the more popular terminology can be helpful as you work through implementation. May of these terms are used throughout this site, so this is a good place to review them if you want a more complete understanding.
Dictionary of Lean Terms
ABC INVENTORY – Methodology for determining inventory levels based on value, space consumption, and turns. “A” type inventory is very expensive (keep as little on hand as is reasonable so you don’t tie up too much cash in inventory). “B” type inventory is only moderately or middle of the road expensive (minimize this inventory to free up cash also, but if you have a little extra it won’t break the bank). “C” type inventory is fairly inexpensive (if it consumes little space and costs very little don’t lose any sleep over it. That said you should keep this inventory to a reasonable minimum as well).
ACTIVITY BASED COSTING (ABC) – Costing system that identifies various activities performed in a firm and uses multiple cost drivers (non-volume as well as volume based cost drivers) to assign overhead costs (or indirect costs) to products. ABC costing considers impact and relationship of cost drivers with activities performed. Every “widget” you produce was sitting in a building that you are paying for. Therefore every “widget” has cost added to it by virtue of it being in your plant. Consider also the electricity, water, air conditioning, etc., that have an impact on every product you produce.
ABNORMALITY MANAGEMENT — The ability to see and respond to an abnormality (any violation of standard operations) in a timely manner.
ANDON — A visual signal and or audible alarm. Typically, a light mounted on a machine or line to indicate a potential problem or work stoppage. Can also be link disconnected work areas that action is required
AUTONOMATION — English translation of “Jidoka”. Imparting human intelligence to a machine so that it automatically stops when a problem arises. Machines stop autonomously when defects are made, asking for help. Autonomation was pioneered by Sakichi Toyoda with the invention of automatic looms that stopped when a thread broke, allowing an operator to manage many looms without risk of producing large amounts of defective cloth. Autonomation is a pillar of the Toyota production system.
BALANCED PLANT — A plant where all available capacity is balanced exactly to market demand.
BALANCED DISTRIBUTION OF WORK — Designing a process so work can be divided equally among staff to meet takt time. Ideally work can be rebalanced dynamically as improvements are made in the processes or the takt time changes.
BATCH MANUFACTURING – Producing lots or quantities of a product in order to achieve maximum “Economic Order Quantities.”
BATCH PROCESSING – Producing lots of quantities of a product in order to achieve maximum “Economic Order Quantities.”
BENCHMARKING – Comparison tool used to determine level of process, product, or other successes your company is experiencing when compared to similar companies with similar products or processes; typically competitors. Methods include tracking metrics like on-time delivery, defective parts per million produced, wages paid, market share growth and projections, etc.
BOTTLENECK — An area, workstation or process that limits throughput of the entire process (choke point).
CAPACITY – Maximum amount a process, machine, or system can produce.
CELLULAR MANUFACTURING — An alignment of machines in correct process sequence, where operators remain within the cell and materials are presented to them from outside. Generally a horseshoe or U-shaped work area layout that enables workers to easily move from one process to another in close proximity and pass parts between workers with little effort. “Cells” typically focus on production of specific models in “part families” but can be adjusted to many different products as needed.
CHAKU-CHAKU LINE — Meaning load-load in Japanese, this describes a work cell where machines off-load parts automatically so that operators can take a piece directly from one machine to the next without waiting.
CHANGE AGENT — A person whose demonstrated mission is to move from the now state, or batch and queue, to the future. Person(s) who lead a company from the traditional manufacturing practices and philosophies to becoming a Lean organization.
CHANGEOVER – Switching from producing one part/product or service to another is generally known as a changeover. Defined as to the completion of the last good product or service until the completion of the next good product or service. Includes such things as mounting and removal; centering and alignment; trial runs, etc.
CO-LOCATION – Physically locating personnel and product lines in a single area thereby enabling rapid and constant communication among key personal responsible for those products.
CONCURRENT ENGINEERING – Reorganization of product design, development, production planning and procurement processes to take place to the extent possible in parallel (more or less at the same time), utilizing multi-disciplinary project teams, electronic information management, and improved communications. This concept can dramatically reduce product development time.
CONSTRAINT – Taken from (TOC) “Theory of Constraints.” A constraint is anything that limits a system from achieving higher performance relative to its goal.
CONTINUOUS FLOW – Ideally a product or service that flows from one “value added” step to the next without any waiting or interruption. Achieving single piece flow.
CONTINUOUS IMPROVEMENT – Ongoing process/philosophy of doing things better, faster, and cheaper. The commitment to creating a better product, work environment, and business, every day.
CREATIVE PROBLEM SOLVING – Methods that combine defining of problems, identification of patterns, generation of new ideas, and action planning to resolve problems with unique and innovative solutions.
CURRENT STATE OR “AS IS” MAP – Taken from Value Stream Mapping (VSM), the “Current State Map” shows the value stream or process map as it is operating right now.
CYCLE TIME — Time it takes to do one repetition of any particular task typically measured from “Start to Start” the starting point of one product’s processing in a specified machine or operation until the start of another similar product’s processing in the same machine or process. Cycle time is commonly categorized into:
1) Manual Cycle Time – Time loading, unloading, flipping/turning parts, adding components to parts while still in the same machine/process, etc.
2) Machine Cycle Time – Processing time of the machine working on a part.
3) Auto Cycle Time – Time a machine runs un-aided (automatically) without manual intervention.
4) Overall Cycle Time – Complete time it takes to produce a single unit. This term is generally used when speaking of a single machine or process.
5) Total Cycle Time – This includes all machines, processes, and classes of cycle time through which a product must pass to become a finished product.
This is not Lead Time, but it does help in determining it. The time it takes an operator to complete one full repetition of work. Globally, it is the time it takes before the cycle repeats itself. See Operator Cycle Time or Machine Cycle Time.
DEMAND FORECASTING – Prediction of levels of weekly or monthly product activity over a specified time (generally about two years).
DEMAND MANAGEMENT – Prediction of levels of weekly or monthly product activity over a specified time (generally about two years).
DIGITAL MANAGEMENT – Digital manufacturing systems integrate advanced 3D simulation tools, virtual reality, and collaborative product lifecycle management (plm) software to visibly manage a product through manufacturing process.
DISTRIBUTION MANAGEMENT – Tool for deciding upon and producing optimal quantities of products needed from each plant to supply distribution warehouses/centers with sufficient products to meet customer demand with minimal costs and risks incurred.
EMPOWERMENT – Giving employees more responsibility, authority, and accountability for effecting daily processes and improvements within their purview.
ENTERPRISE RESOURCE PLANNING (ERP) – Taking needs of an entire organization into account. ERP is essentially an extension of “MRP” (Manufacturing Resources Planning) which attempts to ascertain needs and abilities of a company system.
ERROR & MISTAKE PROOFING – Lean tool for making products correctly the first time by designing devices and systems into the process that provide staff immediate feedback that they have made or are about to make an error, so they can take corrective action that prevents that error from becoming a defect. “Poka-yoke”
EXTERNAL SET-UP — Elements of tooling set-up that can be performed safely while the machine is still running. Steps and procedures that can be performed while a machine is still operating that facilitate SMED “Single Minute Exchange of Die” process.
FIRST IN FIRST OUT (F.I.F.O.) – System for keeping track of order in which information or materials are to be processed. Goal of fifo is to prevent earlier orders from being delayed in favor of newer orders which would result in increased lead time and unhappy customers regarding earlier orders.
FISHBONE DIAGRAM – Problem-solving tool that uses a graphic description of various process elements to analyze potential sources of variation or problems. The diagram itself resembles (somewhat) the skeleton of a fish.
FIVE S (5S) — Workplace organization tool/process that maximizes cleanliness, organization, and safety of all elements in a working environment. Visual Workplace or Visual Factory. Principle of waste elimination through workplace organization. Derived from Japanese, the five Ss are defined as: Seiri, to segregate and discard. Seiton, to arrange and identify. Seiso, to clean and inspect daily. Seiketsu, to revisit frequently, and Shitsuke, to motivate to sustain.
FLEXIBLE AUTOMATION – Highly mechanized (often robotic) method for switching from one product type or style to another product type or style. Key in FA is automatic changeovers of dies, tools and materials.
FLEXIBLE MANUFACTURING SYSTEM (FMS) – Manufacturing process/system designed so that production areas (such as work cells or lines) can be changed and rebalanced often to adjust labor and materials to better meet and match demand.
FLOW CHART – Visual depiction of steps in a process or system.
FLOW PRODUCTION – Way of doing things in small quantities in sequential steps, rather than in large batches, lots or mass processing. Product (or service) moves (flows) from process to process in smallest, quickest possible increment (one piece). Only acceptable quality products or services are accepted by downstream customer. See also one-piece flow.
FUTURE STATE MAP – Future-looking version of a process map “Value Stream Mapping” (VSM), depicting how a process will work after improvements are implemented. See “ideal state map”
FIVE WHYS (5 WHY’S) – A tool used to peel away symptoms of problems or process failures in order to find the root cause.
GEMBA – Japanese term that means “Real Place” or “Where action takes place.” In Lean we speak of GEMBA as being the place where “Value” is added to a product. Often refers to the factory floor. Changes are made at the Gemba, not in the conference room.
GOAL – Measurable statement of specific intent bounded by a specific period of time.
S.M.A.R.T. Goals are:
Specific – We will change by “x” amount.
Measurable – We are now at “x” amount and will Be at “x” amount after improvements.
Attainable – These are reachable results even though they may require some “stretch” to achieve.
Relevant – Desired results are pertinent to the people and area working on them well within their range of things they are allowed to change.
Timely – Specific dates are important. We will change “x” by 9/22/2010.
GROUP TECHNOLOGY (GT) – Group Technology separates parts into “Families” or groups that have similar needs with respect to manufacturing processes. Parts may be “grouped” by size, weight, color, flavor, chemistry, treatments/special processing needed, etc.
HEIJUNKA — Production smoothing; creating a build sequence that is determined by SKU average demand.
INTERNAL CUSTOMERS – In a process “Internal Customers” are people, machines, or work groups who are supplied with products or parts made in preceding work area(s).
INTERNAL SET-UP — Elements of tooling set-up that must be performed while the machine is not in motion. Taken from (SMED), these are setup procedures that can only be affected when a machine is in a “Zero Mechanical State.” If a SMED Team can make “Internal” setup procedures “External,” they will generally reduce setup/changeover times.
INTERNAL SUPPLIERS – Are people, machines, or processes delivering or supplying products or parts they have made to the next (in sequence) work area(s). Essentially, everyone and every department is someone’s customer and someone’s supplier. Departments may have many different Internal Suppliers and Internal Customers. Whether an individual or a department has only one or many customers/suppliers they should always treat them as if they were “prized customers” or “valued suppliers.”
INVENTORY – Money and materials invested in by a company in order to create products for sale. Most common types of inventory are:
Raw materials – Unprocessed components waiting for work to be done on them. This is the least expensive form of inventory, especially if suppliers will wait for payment until you begin using these materials.
Work-in-process (w.i.p.) – Materials that have had some work done to them but are not yet finished. This is the second most expensive form of inventory as “value” has been added to the materials.
Finished goods – This is the most expensive type of inventory as the materials have already traveled through the value stream and are now complete. Although most companies carry some finished goods inventory, it can be a serious waste and burden on cash-flow.
Inventory Turns – Number of times you can “Turn” (use and replace) your inventory/money over in a year.
JUST IN TIME (JIT) — Manufacturing what is needed, when it is needed, in the quantity it is needed. Production system to make what the customer needs when the customer needs it in the quantity the customer needs, using minimal resources of manpower, material, and machinery. The three elements to making just-in-time possible are takt time, flow production, and pull system.
KAIZEN — A combination of two Japanese words Kai (change) and Zen (good). Usually defined as “continuous improvement.” Japanese for ‘change for the better’ or ‘improvement’. A business philosophy of continuous cost reduction, reducing quality problems, and delivery time reduction through rapid, team-based improvement activity.
KAIZEN BREAKTHROUGH — A time-sensitive, rapid-deployment methodology that employs a focused, team-based approach. Continuous improvement.
KAIZEN IMPLEMENTATION TEAM(S) – (“Improvement Team(s)”) Team(s) that implement Lean Manufacturing tools needed to effect improvements. Many companies use a single “Kaizen Team” to effect changes brought about by Lean Manufacturing.
KANBAN —Japanese word for ‘sign’, kanbans are typically a re-order card or other method of triggering a pull system based on actual usage of material. Kanbans are attached to actual product, at point of use. Kanban cards have information about parts (name, part number, quantity, source, destination, etc.) but carts, boxes, and electronic signals can also be used. Squares painted on floor to indicate storage or incoming areas are frequently, but mistakenly, referred to as kanbans.
LEAD TIME — The amount of time required to produce a single product, from the time of customer order until products are shipped or services delivered.
LEAN ENTERPRISE – An organization that is engaged in endless pursuit of waste elimination in all of its activities. Lean Enterprises reduce or eliminate paperwork, improve supply chain agreements, enhance hiring and training processes, provide employee development opportunities, and many other such activities.
LEAN MANUFACTURING — Using the minimum amount of total resources — man, materials, money, machines, etc. — to produce a product and deliver it on time. Also a business practice characterized by endless pursuit of waste elimination. A manufacturer that is lean uses the minimum amount of manpower, materials, money, machines, space, etc. to get the job done on time.
LEAN PRODUCTION – Manufacturing/production system best characterized as relentlessly eliminating waste from all of its activities and operations.
LEVELING – Smoothing out production schedule by averaging out both volume and mix of products. Production leveling allows a consistent workflow, reducing fluctuation of customer demand with eventual goal of being able to produce any product any day.
LEVEL-LOADING & MIXED MODEL LOADING (HEIJUNKA) – Advanced Lean methods that require a good deal of Lean implementation before they can be successfully applied. Technique used to balance production throughput according to needs of customers (Demand).
MACHINE CYCLE TIME — The time it takes for a machine to produce one unit, including the time it takes to load and unload.
MANUFACTURABILITY – Extent to which a product can be efficiently manufactured with maximum reliability.
MANUFACTURING RESOURCE PLANNING II (MRP II) – Computerized method for planning use of a company’s resources, such as scheduling raw materials, suppliers/vendors, production equipment, and processes.
MASS CUSTOMIZATION – Production system that stresses production of relatively small lots of customized or somewhat unique goods.
MASTER SCHEDULE – Overall sequenced schedule of multiple orders through a factory.
MATERIALS HANDLING – Function of moving objects from one location to another.
MATERIALS REQUIREMENTS PLANNING (MRP) – Using software, materials planning is accomplished through evaluating Bill of Materials (BOM), Inventory Data, and Master Schedule in order to stimulate replenishment of materials to be consumed and present purchase orders (PO’s) for future materials needed.
MUDA — Any activity that adds to cost without adding to value of the product.
MURA — Variations in process quality, cost, and delivery.
MURI — Unreasonableness; demand exceeds capacity.
NON-VALUE ADDED — Any activity that consumes resources while producing no corresponding value. Adds cost without adding value to the product or process.
ONE-PIECE FLOW — A manufacturing philosophy which supports the movement of product from one workstation to the next, one piece at a time, without allowing inventory to build up in between.
OPERATOR CYCLE TIME — The time it takes for a person to complete a predetermined sequence of operations, inclusive of loading and unloading, exclusive of time spent waiting.
OVERALL EQUIPMENT EFFECTIVENESS (OEE) – Combined Measurement of Equipment Availability, Performance Rate, and Quality Rate. An essential measurement for determining effectiveness of your equipment and beginning to understand where up-time improvements are possible.
Formula – Machine Availability X Performance Rate X Quality Rate
Machine Availability – Actual time available for production when you need it.
Performance Rate – Measure Of “How Well The Machine Was Running When It Was Running.”
Quality Rate – How many good parts VS. defective parts a machine has produced during the time it was running.
The effectiveness of a machine is usually expressed as a percentage comparing planned versus actual. Reasons for not meeting 100% are usually categorized as the six major losses. These losses then form the basis for improvement strategies. High OEE percentages are extremely important in flow production where processes are linked with only standard work in process.
PARETO CHART – Graphical tool for ranking causes of problems from most significant to least significant. It is based on pareto principle, first defined by Vilfredo Pareto, and popularized in the 1950’s by Joseph Juran. Pareto charts suggest most effects (or results), come from relatively few causes; that is, 80% of effects come from 20% of possible causes.
PART FAMILIES – Separates parts into “Families” or groups that have similar needs with respect to manufacturing processes. Parts may be “grouped” by size, weight, color, flavor, chemistry, or type of processing needed.
POLICY DEPLOYMENT — Matching the strategic business goals of an organization to its available resources. Communicating those goals throughout the organization and linking everyone to the same objectives.
POKA YOKE — A Japanese word for mistake proofing, a poka yoke device prevents a human error from affecting a machine or process; prevents operator mistakes from becoming defects.
POINT KAIZEN — An improvement activity intensely directed at a single workstation, performed quickly by two or three specialists. Typically follows a full-blown kaizen event.
POINT TO POINT DIAGRAM – Using a line drawn on a layout that signifies the flow of a process or person. These are also referred to as spaghetti diagrams because many times the base condition point to point diagrams are so disorganized that the flow resembles looking down on a bowl of spaghetti.
PROCESS CAPACITY TABLE — A chart primarily used in a machining environment that compares machine load to available capacity.
PRODUCTION SMOOTHING — A method of production scheduling that, over a period of time, takes the fluctuation of customer demand out of manufacturing. Producing every part, every day.
PROCESS MAP – Work flow diagram which depicts elements of a work flow often using time, people, and machine information to illustrate tasks and results.
PRODUCTIVITY – Scaled amount of benefit realized as derived from inputs.
PULL SYSTEM – One of 3 elements of JIT. The pull system enables production of what is needed based on a signal of what has just been sold. The downstream process takes product they need and ‘pulls’ it from producer. This ‘customer pull’ is a signal to a producer that a product is sold. The pull system links accurate information with process to minimize overproduction.
RAPID CYCLE CHANGE – This technique breaks a large project into small elements and then tests design or improvement assumptions in small pilots, one after another in rapid succession. Allowing success to build on success and lessons learned from failures to take place quickly. This allows you to minimize going down the wrong path and not realizing it until substantial time and money have been expended. Dramatic improvements based on many smaller successful pilots.
SET-UP REDUCTION — Reducing the amount of downtime during changeover from the last good piece to the first good piece of the next order.
SEVEN WASTES (7 WASTES) – Activities identified and categorized as non-value adding events or processes that limit profitability in a company.
1. Overproduction – Making more parts than you can sell. In service processes, having excess capacity with no customers to use it.
2. Delay – Waiting for processing, parts sitting in storage, etc.
3. Transporting Parts/Materials – Moving parts to various storage locations, from process to process, etc.
4. Over-processing – Doing more “work” to a part than is required.
5. Inventory – Committing money and storage space to parts not sold.
6. Motion – Moving parts more than minimum needed to complete and ship them.
7. Making Defective Parts – Creating parts that cannot be sold “as is” or that must be reworked, etc.
SINGLE-MINUTE EXCHANGE OF DIES (SMED) — From the last good part to the first good part on the new set-up accomplished in anything less than 10 minutes. AKA “Single-digit set-up.”
SIX SIGMA (6 SIGMA) – Scientific/data-driven approach for achieving 6 standard deviations between mean and nearest specifications limit. Six sigma methods can be applied to all aspects of manufacturing, transactional processes, and virtually any form of work or processing.
STANDARD OPERATIONS — The best combination of people and machines utilizing the minimum amount of labor, space, inventory, and equipment.
STANDARD WORK — Pre-determined sequence of tasks for the operator to complete within takt time. Includes; process sequence, time/timing, workstation layout, key quality/safety indicators, operators walk patterns, and machine cycle times.
STANDARD WORK COMBINATION SHEET — A document showing the sequence of production steps assigned to a single operator. It is used to illustrate the best combination of worker and machine.
STANDARD WORK LAYOUT — A diagram of a work station or cell showing how standard work is accomplished.
STANDARD WORK IN PROCESS — The minimum (rarely but in some cases maximum in the service sector) amount of work in process to allow work to flow smoothly and without delay.
STOP-THE-LINE AUTHORITY — When abnormalities occur, workers have power to stop the process and prevent the defect or variation from being passed along.
SUB-OPTIMIZATION — Optimizing each piece of equipment; keeping all machines running, no matter the cost or consequence. Typically this inflates the number-one cost of production: material.
SUPERMARKET — A shop floor, line-side location where parts are sorted and made ready for presentation to operators.
TAKT TIME — The total net daily operating time divided by the total daily customer demand. Matching rate of production to rate of sales or consumption. Takt Time (a German word for meter or measure) is often compared to a metronome symbolizing “keeping time.” In its purest sense, Takt Time is used to only produce exactly what your customers will consume; nothing more and nothing less. Takt time is the pace at which a customer is buying a particular product or service. Takt time is not how long it takes to perform a task. Takt time cannot be reduced or increased except by changes in production demand or available time to work. Takt time is one of 3 elements of JIT.
THROUGHPUT — Rate at which work proceeds through a manufacturing system.
TIME-BASED STRATEGY — Organizing business objectives around economy-of-time principles.
TOYOTA PRODUCTION SYSTEM — Based on some of the first principles of Henry Ford, this describes the philosophies of one of the world’s most successful companies. The foundation of TPS is production smoothing; the supports are just in time and jidoka.
TOTAL PRODUCTIVE MAINTENANCE (TPM) – TPM is an equipment maintenance system that proactively addresses maintenance issues before they become major problems and cause equipment downtime. TPM aims at maximizing equipment effectiveness and uptime throughout entire life of equipment.
TOTAL QUALITY MANAGEMENT (TQM) – Quality control system focused on correction of quality issues before they are permitted to subsequently be passed on for further processing. TQM systems are often “built-in” to manufacturing processes.
VALUE ADDED — Any activity that transforms a product or service to meet the customer need for the first time. Sometimes defined as something the customer is willing to pay for. Changing the fit form or function of a product or service for the first time.
VALUE ANALYSIS — Evaluating the total lead-time and value-added time to identify the percentage spent in value-added activities.
VALUE STREAM MAP (or Value Chain Map) — A visual picture of how material and information flows from suppliers, through manufacturing, to the customer. It includes calculations of total cycle time and value-added time. Typically written for the current state of the value chain and the future, to indicate where the business is going.
VISUAL CONTROLS — Creating standards in the workplace that make it obvious if anything is out of order.
VISUAL FACTORY/WORKPLACE – Workplace organization tool/process that maximizes cleanliness, organization, and safety of all elements in a working environment.
VISUAL MANAGEMENT — a system that allows management and staff to understand at a glance whether operating conditions are normal or abnormal.
WORK CELLS – Generally a U or = shaped work area layout that enables workers to easily move from one process to another in close proximity and pass parts between workers with little effort. “Cells” typically focus on production of specific models in “part families” but can be adjusted to many different products as needed.
WORK-IN-PROCESS (WIP) — Inventory waiting between operation steps.
WORK SEQUENCE — The correct steps the operator takes, in the order in which they should be taken.