I was asked to write an article on Lean for the Petroleum Joint Ventures Association, here is parts 1+2:
Q1. What is Lean?
Lean is a collection of ideas and tools companies use to improve productivity. It starts with the simple question “What does our customer value?” If the company can determine what its customers value, and if value is defined as the minimum activity that modifies or changes a product or service to meet customer requirements, the activities of the company can then be identified as either adding value or generating waste. Waste includes reprocessing, searching for information, double checking, fetching, waiting, and so on. In fact, very little of what most companies do can be classified as value.
n Lean manufacturing focuses on identifying and enhancing value for the customer. By identifying value we can then identify and eliminate waste throughout the entire value stream.
This assertion is backed by surveys1 that have found for a typical manufacturing company, only 5-10% of activities add value. For service companies this number can increase to 30-40%. Don’t believe it? Think about having a puncture on your car fixed. The actual time to fix the puncture takes only a couple minutes, but the whole process of planning and scheduling and traveling, takes much longer.
Q2. Can Lean be useful for non-manufacturing companies?
Every process has opportunities for improvement. No process is 100% efficient from start to finish. It doesn’t matter if that process is manufacturing a car, preparing a quote for a customer, or drilling an oil well. Lean provides both a framework and the tools for companies to drive out inefficiency. This is why the big hardnosed Oil &Gas companies like Talisman and Shell are executing Lean; they know it‘s going to pay off with higher productivity and increased profits. These companies, in turn, following the examples of Toyota and Honda, are going to look at their partners and suppliers to influence them to implement Lean and drive costs out of the supply chains. This concept is already being embraced in Calgary, Alberta, with both Mount Royal University and the Southern Alberta Institute of Technology offering courses in Lean Management.