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Lean Reference Guide > Lean Dictionary

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"A" Terms
from The Continuous Improvement Companion

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  • A3 Management

    A3 management is a structured way of running a business. A3 management focuses on using a scientific approach to problem solving that creates a learning organization.

    It is imperative that the focus of the problem solving efforts stays on the process, and not on people. A3 management requires a level of openness about discussing problems that is hard to achieve. If people on the team feel that A3 management is going to get them in trouble, they will be resistant to answering questions candidly.

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  • A3 Problem Solving

    A3 problem solving is a structured approach to resolving problems. It was popularized by Toyota, but is now in widespread use.

    A3 problem solving is hard to replicate because it requires discipline to use it and persistence to go through the iterative steps of coming up with a resolution.

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  • A3 Process

    The A3 process is a methodology for getting to the root cause of a problem and addressing it in a way that will permanently eliminate it.

    Following the A3 process entails a large amount of back-and-forth between managers and their teams. For that reason, the A3 process is well-matched to learning organizations—companies that constantly strive to get better.

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  • A3 Report

    The A3 report is the communication medium of A3 management. The A3 report takes its name from the size of the paper, “A3” or 11 x 17 inch, that it is generally written or printed on.

    The large size of the A3 report lets users see, at a glance, a great deal of information, including:

    • Header info (Problem Title, Owner, Date, etc.)
    • Background Info
    • Current State
    • Goals
    • Analysis
    • Plan
    • Follow-up
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  • A3 Template (+Video +Form)

    We offer a free A3 template for our registered users. Please keep in mind that this is simply one format. There is no set layout for an A3 report, as they will vary to fit the specific problem.

    Format: PPTX (3 layout variations)

    Regular Price: Free for Registered Users

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  • A3 Thinking (+14-Page Lean PDF +Video +MP3 +Form)

    A3 Thinking Lean Term on PDF

    A3 Thinking is a focused, structured problem solving methodology. Watch a short video, and download a FREE 14-Page PDF on A3 Thinking.

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  • ABC Inventory

    ABC inventory is a method of categorizing inventory to segment items into different inventory management processes. Typically, the segmentation is done by calculating out the annual usage of the parts, and labeling the top 70% of parts (by cost) as ‘A’ parts,  the next 25% as ‘B’ parts, and the final 5% as ‘C’ parts. On occasion, an organization may include all parts without usage over the last year as another category (i.e. ‘D’ parts). 

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  • ABC Machines

    Machines are essential to production environments.  But not all machines are created equal. The impact of breakdowns varies widely. Because resources are limited, it is important to have a strategy to manage machines according to how critical they are to the operation.

    An ‘ABC Machines’ strategy is one way to…

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  • Abnormal Conditions

    Imagine you are at home, and you hear a funny sound coming from the washing machine, you smell a slight odor of smoke coming from the kitchen, or you see a water mark on ceiling. Each of these things indicates that something just isn’t right. They are abnormal conditions. Sometimes, they tell you that a problem already occurred, but they frequently forecast a pending problem. They let you know that you need to fix something that is about to get worse.

    Abnormal conditions exist at work, just like at home. On the job, though, abnormal conditions link tightly to the processes that you do. Each process typically has a range of conditions under which it operates. When something gets out of whack, an abnormal condition results. When these abnormal conditions exist, it is hard to get consistent outputs.

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  • Abnormality Management

    There are many different styles of management. One that works well in a Lean environment is abnormality management. In a nutshell, systems are developed that highlight abnormalities. When these abnormal conditions are present, leaders and their teams take action to return the situation to standard.

    While this sounds simple, the truth is that it is seldom applied effectively, because most organizations do not have clear standards that are consistently followed.

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  • Absences

    Absences are, in a nutshell, times when a person is not present to do their normal work. Absences primarily fall into two categories from a production viewpoint—planned and unplanned.

    Your company’s HR team may categorize absences in a number of ways, but from the operations standpoint, human resource definitions are irrelevant. It does not matter whether a person is on a vacation, medical leave, sabbatical, or suddenly retires. All that really matters is whether the team knows in advance that people will be gone. Obviously, the duration of the planned absence makes a difference in how a team prepares for the absence, but knowing about it in advance gives them an opportunity to take action.

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  • Acceptable Quality Level / AQL

    An acceptable quality level (AQL) is the percentage of defects allowed for a lot before it is rejected by a customer.  Due to the size of most lots and the costs of 100% inspections, the quality of an incoming lot is normally determined by a sampling plan. The AQL will translate into a number of defects that is allowed in a sample of a specified size.

    AQL may be negotiated in a purchasing contract, or it may simply be part of an internal quality control process.

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  • Acceptance Number

    The acceptance number is the highest number of nonconforming items that can be found in a sample for a lot to still be considered acceptable. This number is determined by statistics and is based on the required quality level, lot size, and sample size.

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  • Accountability in Lean

    For Lean leaders, both accountability and authority are obviously important. Authority is the state of having the power to give directions and make decisions. It is generally is granted by an organization to individuals for the purpose of getting results in the areas they are accountable.

    That’s the tradeoff. With the gift of authority comes the burden of accountability–having to deliver good results. Accountability comes from an external person or organization. That simply means that someone else is going to call you on the carpet to explain the results if they are not up to standard. It could be for the performance of a team, or for a continuous improvement project.

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  • Accounting

    A company has to know whether what they are doing makes money, right? The people who know how to figure this out are the accountants.

    In the US, accounting is done according to Generally Accepted Accounting Principles (GAAP). This provides a standard method of accounting so that when one company says they made ‘X’ dollars in profit, if can be compared to the performance of another company.

    In order to make sure that everyone is counting the same way, there are several groups that have oversight. The IRS is one. They have their own way of doing accounting, so sometimes companies have different numbers for taxable income that they report to the IRS, and net income that they report to the public (Pratt, 2000, p. 28).

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  • Accuracy

    The definition of accuracy is essentially having results (data) that is centered on a target value. Statistically speaking, it is how correct the mean value is. The layman’s definition of precision is “a measure of how little variation there is in your system”.

    Lean Six Sigma depends heavily on understanding both of these concepts. When a process is not delivering consistently acceptable results, you likely are dealing with either inaccuracy or an imprecise process.

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  • Action Date

    Using an ‘action date’ is a proactive approach to managing your workload.

    Whenever a task is unfinished, there is a next step. Frequently, that step is passively managed. Usually this means waiting for something to happen to allow work to continue. It could be waiting for a part to arrive, or for a customer to call back, or something similar.

    Rather than just leave things to chance, always assign an action date to a delayed task. An action date creates a sense of ownership and active management in people.

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  • Action Plan

    Action plans are, in effect, roadmaps to achieve goals. They should contain a description of the improvement goal, names of people on the team, steps to be taken, names assigned to the steps, and due dates for steps.

    Some action plans are simple in their layout. Others add in additional features, such as a graphical timeline, a synopsis of the current situation, graphics that show completions progress, and other bells and whistles. Advanced action plans use Work Breakdown Structure (WBS), a project management tool, to break projects down into discrete work elements.

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  • Activity Ratio

    The activity ratio is a measure of how quickly work moves through a process. It is simply the sum of the process times divided by the total lead time.

    (Σ Process Time) / Total Lead Time = Activity Ratio

    For example, if the processing time was 30 minutes and the lead time was 2 hours, the activity ratio would be .25 or 25%.

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  • Activity-Based Costing

    The definition of Activity-Based Costing: a means of attempting to accurately apply costs of running a business to a specific product or service. It entails identifying the ‘cost drivers’, or the things that drive the consumption of shared resources, and using them to apply a logical proportion of overhead costs to specific products.

    In traditional costing methods, overhead may be applied by a broad brushstroke. All overhead costs may be applied, for example, at the same ratio as the ratio of direct labor costs. The danger of this method is that one product may, in effect, subsidize another product that uses resources in a different manner. In some cases, this may simply skew the understanding of how much profit each product contributed. In other cases, the incorrect allocation of costs may actually make an unprofitable product group appear profitable.

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  • Ad Hoc Query

    An ad hoc query is simply a one-time request for information from a database. (Ad hoc is Latin for ‘for this purpose.)

    Many database reports are standardized and are used repeatedly. They cover the vast majority of typical operations management needs.

    Ad hoc queries, though, play a big role in Lean. Often, the questions that teams have during a kaizen event cannot be answered with standard reporting functionality. A common mistake is to try to force that data to match the problem at hand. Generally, this doesn’t provide the breakthrough insight that teams need.

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  • Administrative Processes

    Administrative processes substantially contribute to a company’s costs. Obviously, it depends on the company, but estimates commonly attribute 60-80% of expenses to administrative processes.

    Administrative processes are the office tasks that are required to keep a company humming along. Administrative processes include human resources, marketing, and accounting. Basically anything that entails managing the information that supports a business is an administrative process.

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  • Affinity Diagram

    One of the more unusually named Lean tools, the affinity diagram is not really a diagram at all. It is more of a sorting and grouping process to organize ideas into manageable chunks.

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  • Agile Manufacturing

    Agile manufacturing describes a company’s ability to be responsive to the marketplace. A company has to be able to roll out new products and services as the needs and desires of their customers change. It also has to offer increasingly varied product mixes and greater customization when customers requires it. Agile manufacturing promotes the belief that these rapid adjustments can be done in a cost effective manner.

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  • Aha! Moments

    Aha! moments are the instances when the ‘light bulb’ comes on. It is the point in time when someone makes the transition from not knowing something to full understanding.

    Fortunately, Aha! moments are often visible on the faces of people experiencing them.

    Why is that relevant you may wonder? Many instructors, especially those mentoring Lean students, live for Aha! moments. It is very rewarding to help coach someone to that moment when Lean suddenly makes sense for them.

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  • Algorithm

    An algorithm is simply a set of instructions for solving a specific problem. It is commonly associated with math or computers, but applies to all problems. A troubleshooting guide is a form of algorithm, as is a recipe. Algorithms make life easier by standardizing the method to solve a problem, and help us avoid having to reinvent the wheel every time we encounter some obstacle.

    To truly be an algorithm, the set of instructions must deliver the same results for the same set of conditions, each and every time.

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  • Allocation (Resource)

    Resource allocation is simply the art and science of parceling out the various resources available to an organization.

    We use resource allocation in our everyday lives-we have to choose how to divide our time, money, and energy. How do we decide? At home, we do it very informally. We often use gut feelings to decide if we want a new TV more than a trip to the tropics. Resource allocation, though, even when done informally, is based on goals.

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  • Alpha Risk

    Alpha risk is, in statistical terms, the chance of rejecting the null hypothesis when it is, in fact, true. In other words, it is a false positive (i.e. a good part is identified as a defect).

    This risk is also known as a Type-I risk, or producer’s risk.

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  • Alternative Hypothesis

    The alternative hypothesis is the assumption that there is a statistically significant difference between two sets of data. This is essentially the opposite of the null hypothesis. The alternative hypothesis is accepted if the null hypothesis is rejected.

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  • Ambiguity

    Ambiguity is the state of uncertainty in meaning. Ambiguity is harmful to Lean companies for several reasons.

    • Ambiguity reduces consistency. If a process is vague, it is hard to follow the same way every time.
    • Ambiguity slows processes down. Requesting clarification breaks the rhythm of a process.
    • Ambiguity misaligns goals. If everyone doesn’t interpret objectives the same way, teams go in different directions.
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  • American National Standards Institute (ANSI)

    The American National Standards Institute (ANSI) is a US government organization that coordinates the creation of voluntary national standards. It is the official US representative to the International Organization for Standardization (ISO). More detailed information is available at www.ansi.org.

    ANSI works towards promoting national standards. These standards help consumers in the long run, as national standards ensure that competing companies in the same industry are following the same ground rules. Things like crash tests for cars, wind speed ratings for aerial work platforms, and a host of other things are all covered by national standards. ANSI estimates that there were more than ten thousand national standards in mid 2006.

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  • Amortization

    Let’s say that you and three friends rent a cabin for a week. During that week, you spend a hundred bucks a day on food, entertainment, and the other costs of being on vacation. Is that all you spent? Nope. You still have to account for the cost of the cabin, right? If the cabin cost $840 to rent, you’d take your share of that and add it to the cost of your vacation—an additional $210.

    So, even though, on the first day when you checked in you spent $310 and the rest of the week you spent $100 per day, was the first day really more expensive? If it was, you could just show up a day later and save a lot of money, right? No—one seventh of the value of the cabin is used up each day. So in reality, the vacation cost you $130 per day.

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  • Analysis

    Analysis is the deep dive into the details of a problem in order to better understand it. Analysis is a central part of most problem solving methods. In fact, the ‘A’ in DMAIC (from Six Sigma) is Analyze.

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  • Analysis of Variance (ANOVA)

    Analysis of variance, also known as ANOVA, is a relatively sophisticated statistical modeling technique that looks at variation within and between two or more groups.

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  • Analytic Hierarchy Process (AHP)

    The Analytic Hierarchy Process, or AHP, is a decision making tool developed in the 1970’s by Thomas L. Saaty. Its key characteristics are that it breaks big decisions into smaller ones, and relies on direct, one-on-one comparisons to make judgments.

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  • Andon (+7-min MP3, +6-Page PDF)

    Andon Lean Term on PDF

    Making a workplace visual is an important part of continuous improvement. Andon lights are one method of providing visual warnings that drive action.

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  • Annual Objectives

    In the generic definition, annual objectives are simply the company’s goals for a calendar year. In most cases these goals should target a degree of improvement.

    In a Lean organization, however, there’s a much more specific definition for annual objectives…

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  • Annualized Values

    Often, something occurs over a short period, but needs to be compared to a full year. This is known as annualizing. An example: You are applying for auto insurance, and the agent asks you what your yearly mileage is. You know that you drove 1,000 miles in the last month. The annualized rate, therefore, is 12,000 miles.

    In continuous improvement, you will likely be dealing with a great many metrics. You will have annual targets—perhaps for dollars of cost savings, number of people trained in kaizen, or productivity improvements.

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  • Anomaly

    An anomaly is a condition outside of the expected range. Generally, an anomaly has an unusual or unexplained circumstance around it. An explainable spike in a pressure gauge is not an anomaly. An inexplicable, temporary increase would be.

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  • ANSI

    See American National Standards Institute.

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  • Apples to Oranges Comparisons

    Apples to oranges comparisons occur when people examine two objects and draw incorrect conclusions. The problem comes from the fact that the two objects are dissimilar and should not be compared.

    It happens often in Lean. Employees resisting Lean may compare the number of machines they run in a Lean company to the number they used to run, and conclude that they are overworked.

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  • Appreciation (Employee Value)

    Appreciation is the increase in value of an item over time. In most cases, physical things lose value over time. Clothing, electronic equipment, and most automobiles lose value from the moment they leave the factory. Some items, though, rise in value. One only has to look at an antique shop or peruse a few pages of collectibles on eBay to see this firsthand.

    The common denominator in appreciation is the scarcity of the item…

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  • Appreciation for People

    People crave appreciation for their performance. They put a significant amount of effort into their jobs, and most people closely associate their personal value with how they feel they are perceived at work.

    There are many ways leaders show that they appreciate their team. In some cases, they display their appreciation by presenting the person with something tangible—a bonus, a gift, a plaque. In other cases, mere recognition of the work that they do is enough. It is surprising how often leaders forget to thank people for what they do. Far too often, managers take their people for granted.

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  • Artisan Processes

    An artisan process is one that relies on the skills of workers over strong processes. In the past, artisans were held in extremely high regard. This was primarily due, though, to the lack of a reasonable alternative to obtain high quality goods.

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  • Assembly Lines

    Henry Ford is generally considered to be the inventor of the assembly line. In reality, he should be credited with the transition of the assembly line into the modern version of it. Primitive versions had been around in England for about a century. Henry Ford’s primary improvement was the focus of the whole operation around supporting the assembly line.

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  • Asset

    In accounting terms, an asset is an economic resource owned by a company or individual. Assets hold value because of the future benefit they can bring.

    An asset may fall into two categories—tangible and intangible. Tangible assets are what you would expect. Stuff you can touch—buildings, vehicles, machines, etc. Tangible assets are further broken down into noncurrent assets (the stuff mentioned already) and current assets, which typically include inventory, cash, and securities (i.e. stocks). Obviously, the word “current” applies to how quickly the asset can be turned into cash.

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  • Assignable Cause

    An assignable cause is a type of variation in which a specific activity or event can be linked to inconsistency in a system. In effect, it is a special cause that has been identified.

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  • Assumptions

    Assumptions are pieces of information that are presumed to be true, often without any evidence to support them.

    In Lean, people often resist changes by presenting assumptions as fact. “Our customers will never go for that.” “We need all these parts or the line will shut down.” “We can’t get those two machines closer.”

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  • Attribute Data

    All data is not created equally. There are many different categories of ways to describe things. Interestingly, there seems to be little consensus on what the terminology means.

    The term “attribute data”, if searched for on the web, yields a variety of definitions. Further confusing the issue, some of the data type definitions on one site are called by an entirely different, conflicting, name on another. We’ve attempted to form a compilation of the different definitions to create a somewhat standardized set of data terms.

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  • Attribution Theory

    Attribution theory is the study of the psychology behind how people attribute causes to the way they behave and the resulting outcomes.

    There are two types of attribution…

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  • Attrition

    One of the imperatives of any continuous improvement program is a commitment by the organization to protect jobs. If people don’t trust the company, they will be reluctant to do anything that will increase productivity. Obviously, if fewer people can do more, then there is a need for fewer people. Companies can lay people off as a result of improvement activity exactly once. After that there won’t be any more improvements.

    Instead, the company’s leadership should commit to the use of attrition to match staffing to demand. This simply means that as people leave the company, they are not replaced. Over time, the headcount will come down.

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  • Audits

    The term ‘Audit’ generally brings up an image of an IRS accountant knocking on the door. Hopefully at your company, audits don’t bring about such negative feelings.

    Simply put, audits are checks on things (like Lean procedures) that people are supposed to be doing. In most cases, the term ‘audit’ implies some structure to the check, rather than simply walking around and looking things over (though leadership presence like that is important). These types of assessment audits may be of a process or system (i.e. quality systems, regulatory compliance, trade-secret protection, etc.).

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  • Authority

    Authority is a formally granted power to make decisions. Authority is generally bestowed upon a position rather than a person. It is different than accountability.

    For example, a police officer has legal authority while he holds that job. His authority ends when he retires.

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  • Automated Guided Vehicle (AGV)

    Automated guided vehicles (sometimes called Automatic Guided Vehicles) are driverless vehicles that primarily perform transportation functions. In most cases, they support materials groups in distribution of raw materials and in movement of finished goods. These vehicles may either operate similar to a pallet jack, and carry the load, or as a tow-truck, and pull the load. They are guided by a variety of means, including…

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  • Automated Storage and Retrieval System (AS/RS)

    Automated Storage and Retrieval Systems are systems linked to a computerized control with an automated method of retrieving items from a designated storage location. The principle is that the machine rather than a person does the searching and retrieving.

    Most AS/RS units make significant use of vertical space, leading to a high storage density.

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  • Automatic Machine Cycle Time

    Automatic machine cycle time, sometimes referred to as automatic machine time, is the time a machine spends processing a single part without an operator’s interaction.

    Automatic machine cycle time is critical to the concept of jidoka, or separating people from machines.

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  • Automatic Machine Time

    See also Automatic Machine Cycle Time.

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  • Automation

    What is automation? It is the act of adding of a mechanical device to a machine that allows it to operate with reduced, non-continuous input from an operator. This allows the operator to do other tasks while the machine is running.

    In Lean, automation serves the same role it does in any other manufacturing system. It separates people from machines. This allows people to do fewer dirty, dumb, or dangerous tasks and helps them be more productive. Automation also powers the Lean principle of respect for people. It takes them away from mindless tasks, and lets them work on more interesting jobs.

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  • Autonomation

    Autonomation is automation with a human touch. It essentially means that an automated machine has the built in intelligence to identify when there is a problem, shut itself off, and signal the operator. This action prevents the machine from damaging itself or from producing more bad parts.

    Autonomation is also known as jidoka.

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  • Autonomy

    Autonomy is the state of being competent and empowered to make decisions on one’s own.

    Self-directed or self-managed work teams are examples of autonomous groups. In the most effective application of these sorts of teams, workers own the process, rather than having supervisors or leads giving direction. This responsibility may include continuous improvement efforts, goal setting, maintenance, problem resolution, production tracking, and other daily management issues.

    As a company becomes Leaner, it requires greater levels of autonomous activity from its frontline employees.

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  • Availability

    Availability is exactly what it sounds like. It is a state of readiness to perform a task or operation. The term can be applied to a person, process, or piece of equipment.

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