FEATURED LEAN DEFINITIONS

ABC classification

Classification of the items in an inventory in decreasing order of annual dollar volume. This array is then split into three or more classes called A, B, and C, etc. Class A contains the items with the highest annual dollar volume and receives the most attention. The medium class B receives less attention, and class C, which contains the low-dollar volume items, is controlled routinely. The ABC principle is that effort saved through relaxed controls on-low value items will be applied to reduce inventories of high-value items. Syn: distribution by value.

Acceptable productivity level (APL)

The work pace established by management, or jointly by management and labor, at a level considered satisfactory; it is established at a given relationship to the motivated productivity level. 

Acceptance sampling

Sampling inspection in which decisions are made to accept or not to accept a lot (or other grouping of product, material, or service) based on the results of a sample or samples selected from that lot (see "Sampling Inspection"). Notes:The alternative to acceptance is often termed "rejection" for the purpose of the definition. In practice, however, the alternative may take some form other than outright rejection. In lot-by-lot sampling, acceptance and rejection relate to individual lots. In continuous sampling, acceptance and rejection relate to individual units or to blocks of consecutive units, depending on the stated procedure. 

Accuracy

The closeness of agreement between a test result and the accepted reference value. Note: The term accuracy, when applied to a set of test results, involves a combination of random components and a common systematic error or bias component. 

Administrative expense

The overhead cost due to the nonprofit-specific operations of a company. Generally includes top management salaries and the costs of legal, central purchasing, traffic, accounting, and other staff functions and their expenses for travel and accommodations.

Automated storage and retrieval system (AS/RS)

A combination of equipment and controls which handles, stores, and retrieves materials with precision, accuracy and speed under a defined degree of automation. Systems vary from relatively simple, manually controlled order-picking machines operating in small storage structures to giant, computer-controlled storage/retrieval systems totally integrated into the manufacturing and distribution process. Vertical heights of these latter systems can exceed 100 feet.

Autonomous work group design

The design of work around autonomous work teams to incorporate job rotation and/or job enrichment for a greater sense of task meaningfulness.

Available machine time

The portion of a time cycle during which a machine could be performing useful work. 

Available process time

The portion of a time cycle during which a process agent or system could be acting usefully on the product. 

Average cycle time

1. The sum of observed or actual work times, divided by the number of such cycle observations. Abnormal times should be accounted for and usually should be prorated into cycle time.
2. The sum of the average elemental times (see average element time).

Average element time

The sum of a series of observed or actual element times, divided by the number of such element observations. Abnormal times should be accounted for and usually should be prorated into cycle time (see average cycle time). 

Average time

(See Average Cycle time, average element time.) 

Avoidance

A conflict-handling mode that involves ignoring or suppressing a conflict in the hope that it will either go away or not become too disruptive.

Batch picking

An order picking method in which an operator is responsible for picking multiple orders to completion in the same work cycle.

Capability

The measure of the ability of an item to achieve mission objectives given the conditions during the mission.

Causation

An explanation of description of the facts and circumstances that produce a result, the cause and effect for which the contractor claims entitlement to compensation from the owner of the contract.

Cell manufacturing

A manufacturing approach in which equipment and workstations are arranged to facilitate small lot, continuous flow production. In a manufacturing cell, all operations are necessary to produce a component or subassembly are performed in close proximity, thus allowing for quick feedback between operators when problems and other issues arise. Workers in manufacturing cells are typically cross trained and able to perform multiple tasks as needed.

Confidence level

Probability that a particular value lies between an upper and lower bound, the confidence limits.

Control

Measurement of performance or actions and comparison with established standards in order to maintain performance and actions within permissible limits of variance from the standard. May involve taking corrective action to bring performance into line with the plan or standards.

Critical path scheduling or critical path method (CPM)

A network planning technique used for planning and controlling elements in a project. By showing each of these elements and associated completion time requirements, the critical path can be determined. The critical path identifies those elements that actually control the lead time of the project. CPM uses network diagrams with precedence constraints. It is easily run on a computer.

Cycle stock

One of two main components of any item of inventory, the cycle stock is the most active part, i.e., that which depletes gradually and is replenished cyclically. Another part of the item inventory is the safety stock which is a cushion of protection against uncertainty in the demand or in the replenishment lead time. The stock level necessary to prevent shortage during ordering, producing, and shipping of replacement work.  

Cycle time

The total time one piece of product or one transaction resides in a process activity. It includes the setup time, process time, waiting for other units processed in the batch until the batch is released to the next process step.

Heijunka

A technique also called production smoothing used to adapt production to naturally fluctuating customer demand. The Japanese work Heijunka (pronounced hey June kah), means literally “make flat and level.” Customer demand must be met with the customer’s preferred delivery times but customer demand is “bumpy,” while factories prefer “level,” or stable production. So, a manufacturer needs to try and smooth out these bumps in production.

Impact cost

Added expenses due to the indirect results of a changed condition, delay or changes that are a consequence of the initial event.  Examples of these costs are premium time, lost efficiency and extended overhead.

Inventory turnover

The number of times that an inventory "turns over" or cycles during the year. One way to compute inventory turnover is to divide the average inventory level into the annual cost of sales.

Job enlargement

Extending the parameters of the job being performed by an employee in order to make the work more psychologically rewarding. A job may be extended in two dimensions - horizontal and vertical. Horizontal job enlargement can take the form of a greater variety of tasks on which the employee works, an increased number of tasks and job rotation. Vertical job enlargement, or job enrichment, usually takes the form of more planning, more controlling or more team participation on the part of the job incumbent. The additional controlling aspects may include self-pacing as well as inspection. This form of enlargement involves building motivators into the job (See Z94.15 ORGANIZATION PLANNING & THEORY). 

Lead time

The total time from placing the demand order until the product or transaction arrives.

Lean productions

1. Manufacturing activities performed with a specific objective of minimizing inventory related costs and activities.
2. A term developed by MIT researchers to describe companies which have implemented the Toyota Production System.

Learning curve

A graphic representation of the progress in production effectiveness as time passes. Learning curves are useful planning tools, particularly in the project-oriented industries where new products are phased in rather frequently. The basis for the learning curve calculation is the fact that workers will be able to produce the product more quickly after they get used to making it.

Management by wandering around (MBWA)

A practice whereby managers frequently tour areas for which they are responsible, talk to various employees, and encourage upward communication.

Manufacturing cell

A grouping of equipment to form a self-contained autonomous unit to produce parts or products of similar geometry and specifications; equipment may range from traditional machine tools through computer numerical control machines and robots.

Margin of safety

A border, edge or limit beyond which a particular behavior, condition or situation becomes hazardous, unsafe.

Methods analysis:

That part of methods engineering normally involving an examination and analysis of an operation or a work cycle broken down into its constituent parts for the purpose of improvement elimination of unnecessary steps, and/or establishing and recording in detail a proposed method of performance.

Middle management

Managers beneath the top level of the hierarchy who are directly responsible for the work of other managers below them.

Mission

The organization's purpose or fundamental reason for existence.

Mission statement

A broad declaration of the basic, unique purpose and scope of operations that distinguishes the organization from others of its type.

Milestone schedule

A schedule comprised of key events or milestones elected as a result of coordination between the clients and the contractor’s project management. These events are generally critical accomplishments planned at time intervals throughout the project and used as a basis to monitor overall project performance. The format may be either network or bar chart and may contain minimal detail at a highly summarized level.

Poke-yoke

Poke-yoke is a Japanese term meaning "mistake proof." A method of designing production or administrative processes which will, by their nature, prevent errors. This may involve designing fixtures which will not accept an improperly loaded part.

Preventive action

Action taken to eliminate the causes of a potential nonconformity defect or other undesirable situation in order to prevent occurrence.

Process capability

Process capability is a statistical measure of inherent process variability for a given characteristic.

Notes:

1) Standard measures of process capability have not achieved consensus at the present time. some examples are:

• the standard deviation(s) or the range, or a multiple thereof based upon the inherent variability
• a composite value of the component due to inherent variability and a component due to small assignable causes
• a composite value of a multiple of the standard deviation of inherent variability based upon an individual process, plus an acceptable small range allowed for shifts due to assignable causes.

2) When using the term "process capability," it is essential to state which measure is being used.

Process control

1. Automatic control of industrial processes in which continuous material or energy is produced.
2. Pertaining to systems whose purpose is to provide automation of continuous operations. This is contrasted with numerical control, which provides automation of discrete operations. 

Process time

The time a product is actually being worked on in design or production and the time an order is actually being processed. Typically it is a small fraction of the overall cycle or lead time due to one or more forms of waste included in the cycle.

Pulling strategy

A plan to build user demand for a product that distribution channels will be forced to meet.

Servicing

The replenishment of consumables needed to keep an item in operating condition, but not including any other preventative maintenance or any corrective maintenance.

Strategy

The decision rule used for making the choice from available courses of action.

System

An organized collection of interdependent and interactive personnel, machines and methods combined to accomplish a set of specific functions as a larger unit having the capabilities of all the separate units.

System studies

The development and application of methods and techniques for analyzing and assessing programs, activities and projects to review and assess efforts to date and to determine future courses and directions. These studies include cost/benefit analysis,  environmental impact analysis assessment of the likelihood of technical success, forecast of possible futures resulting from specific actions, and guidance for energy program planning and implementation.

Team

A temporary or ongoing group whose members are charged with working together to identify problems, from a consensus about what should be done, and implement necessary actions in relation to a particular task or organizational area.

Tolerance

1. A permissible variation in a characteristic  of a product or process, usually shown on a drawing or specification.
2. In work measurement, the permissible variation of a time value for an operation or other work unit.

Two bin system

A type of fixed order system in which inventory is carried in two bins. A replacement quantity is ordered when the first bin is empty. When the material is received, the reserve bin is refilled and the excess is put into the working bin. This term is also used loosely to describe any fixed order system even when physical "bins" do not exist.

Value analysis

Review of product costs to evaluate contribution to product value. May include phases of work design, methods engineering, and motion economy to reduce manufacturing costs. May include phases of work simplification and brainstorming to evaluate use of alternate materials, components, or work specifications.

Variation

Between-lot (or between-batch) Variation.
Dispersion of the lot or batch averages of the observations or test results over several lots or batches.
NOTE: The between-batch variation will include a component of within-batch variation which can be reduced by increasing the within-batch sample size.

Within-lot (or within-batch) variation.
Dispersion of observations or test results obtained within a lot or batch.
NOTE: The within-batch variation may be estimated from a single batch or by pooling the estimates for several batches, as appropriate.

Wear-out failure period

That final period, if any, in the life of an item during which the instantaneous failure intensity for a repaired item or the instantaneous failure rate for a non-repaired item is considerably higher then that of the preceding period.

Within-lot (or within batch) variation

Dispersion of observation or test results obtained within a lot or batch. Note: The with-in batch variation may be estimated from a single batch or by pooling the estimates for several batches, as appropriate.