Lean Glossary 1
The 5 why's typically refers to the practice of asking, 5 times, why the failure has occurred in order to get to the root cause/causes of the problem. There can be more than one cause to a problem as well. In an organizational context, generally root cause analysis is carried out by a team of persons related to the problem. No special technique is required.
Five terms beginning with 'S' utilized to create a workplace suited for visual control and lean production. 'Seiri' means to separate needed tools, parts, and instructions from unneeded materials and to remove the latter. 'Seiton' means to neatly arrange and identify parts and tools for ease of use. 'Seiso' means to conduct a cleanup campaign. 'Seiketsu' means to conduct seiri, seiton, and seiso at frequent, indeed daily, intervals to maintain a workplace in perfect condition. 'Shitsuke' means to form the habit of always following the first four Ss.
Eliminate everything not required for the current work, keeping only the bare essentials.
Arrange items in a way that they are easily visible and accessible.
Clean everything and find ways to keep it clean. Make cleaning a part of your everyday work.
Create rules by which the first 3 S’s are maintained.
Keep 5S activities from unravelling
Accumulates only product costs, direct and indirect, to measure product cost. The gross margin (under absorption costing) is sales revenue minus all product costs, including applied fixed manufacturing overhead. Absorption costing averages all product costs across units produced. When there are large amounts of committed or fixed costs, making more units reduces the average cost per unit, which may be a visible number. Also, placing some units in inventory defers all the costs of those units from being recognized as expense, which could increase currently reported income.
Activity Based Budgeting
Grew out of Activity Based Cost System / Activity Based Management Cost System. Activity Based Budgeting uses activities (as opposed to a G/L chart of accounts) as resource allocation targets. Activity Based Budgeting starts with products and services, then extrapolates activities / drivers needed to produce those products and services, and defines the resources required.
Activity Based Cost System
A cost methodology that assigns costs to activities and cost objects based on the consumption of resources rather than the traditional costing approach in which costs are allocated to products based on some arbitrary bases such as labor. Activity Based Cost System describes various activities (e.g., unit-level, batch-level, product-level, customer-level, and facility-level) that drive a company’s costs. The integration of Activity Based Cost System into a CVP model thus recognizes the existence of multiple cost drivers, resulting in the production of better information for management.
Activity Based Management Cost System
Activity Based Cost System gives us better visibility than the G/L into product cost and customer costs, but does not address improvement activities. Activity Based Cost System and Activity Based Management Cost System are both based on the concept that the work of an organization can be described as a set of related activities or processes. Costs of goods or services can be measured as the costs of the activities performed to provide the good or service. Activity Based Management Cost System goes another major step by analyzing activities for their degree of customer value-added. After identifying activities that add little or no customer value, Activity Based Management Cost System looks for ways to reduce or eliminate them by redesigning activities and processes. Activity Based Management Cost System looks for ways to improve processes by eliminating non-value-added activities.
Attempts to assign costs to specific products (or batches) based on the costs of resources actually used. Due to fluctuations or permanent changes, actual costs may be different from normal or expected costs.
Attribute Based Cost System
Integrates ABC cost with Quality Function Deployment. Attribute Based Cost System contribution analysis provides a means for examining profitability at the market segment and customer level. It thus improves management decision-making. It also uses multiple internal as well as external cost objects.
The balanced scorecard is a strategic management system used to drive performance and accountability throughout the organization.The scorecard balances traditional performance measures with more forward-looking indicators in four key dimensions:
· » Financial
· » Integration/Operational Excellence
· » Employees
· » Customers
The Balanced Scorecard is an organizational framework for implementing and managing strategy at all levels of an enterprise by linking objectives, initiatives, and measures to an organization’s strategy. The scorecard provides an enterprise view of an organization’s overall performance. It integrates financial measures with other key performance indicators around customer perspectives, internal business processes, and organizational growth, learning, and innovation.
Making or doing activities in groups, lots, or batches in which each part or finished good in the batch is identical. Can happen in both office/admin. and manufacturing environments. Creates 'waste'.
Producing more than one piece of an item and then moving those items forward to the next operation before they are all actually needed there. Thus items need to wait in a queue. Also called "Batch-and-Push." Contrast with continuous flow.
An improvement process in which a company or organization compares its performance against best-in-class companies or organizations, determines how those companies or organizations achieved their performance levels, and uses the information to improve its own performance. The subjects that can be benchmarked include strategies, products/programs/services, operations, processes and procedures.
Six Sigma team leaders responsible for implementing process improvement projects (DMAIC or DFSS) within the business -- to increase customer satisfaction levels and business productivity. Black Belts are knowledgeable and skilled in the use of the Six Sigma methodology and tools.
Black Belts have typically completed four weeks of Six Sigma training, and have demonstrated mastery of the subject matter through the completion of project(s) and an exam.Black Belts coach Green Belts and receive coaching and support from Master Black Belts.(See Six Sigma Belts)