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Lean Reference Guide > Lean Dictionary

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"L" Terms
from The Continuous Improvement Companion

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  • Large Numbers, Law Of

    In statistical terms, the law of large numbers is a theorem that postulates that as the size of the sample of a random variable increases, its average will approach the theoretical average. In layman’s terms, the law of large numbers simply says that over time, the more times you roll a dice, the more likely the average of the rolls will turn out to be 3.5.

    If your sample size is one, meaning a single roll, you have a 2 in six chance of getting a 3 or 4, both close to the average. But you also have a 2 in six chance of being as far away from the expected average as possible by rolling a 1 or a 6. Also note that there is no chance of rolling a 3.5, the theoretical average, with a single dice.

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  • Last-In, First-Out

    In accounting, last-in, first-out (LIFO) is a method of recording inventory. It is used to manage earnings in inflationary times. A last-in, first-out inventory system records the most recent price of materials as the cost, thereby lowering earnings. As a result, the older items, purchased earlier when prices were lower, remain on the books. In Lean systems, with low inventory, this has lower impact.

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  • Layoffs

    Layoffs, also called downsizing, are mass terminations of employees because of a lack of work.

    Layoffs pose a significant risk to Lean and other continuous improvement efforts. If employees get the idea that helping make improvements will cost them their jobs, then they will not want to make things better.

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  • Layouts

    Facility layouts come in three basic flavors.

    1. Unplanned Layouts. Some facilities are not arranged by any master plan. As new machines are needed, they are placed where they will fit. It is fairly uncommon for this method to be used throughout an organization, but many will have a few machines that are obviously placed where there was space.
    2. Functional Layouts / Process-Oriented Layouts. This layout style is characterized by groupings of similar processes that serve multiple product lines. For example, there may be a welding cell, a stamping cell, and a machining shop. It is the traditional way facilities are organized.
    3. Product-Oriented Layouts. In this layout, machines and work areas are positioned sequentially based on the steps required to build a particular product. The closer the machines are, the easier it is to implement flow. This layout often utilizes small, right-sized machines instead of large multi-purpose systems.
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  • Lead Time

    In the most common definition, lead time is the time that elapses from when a customer places an order until the order is received.

    Some variations on the definition of lead time look at the time from when a raw material arrives at a facility until the finished product ships.

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  • Leader’s Intent

    The military has a term called “commander’s intent”. It is a part of every mission briefing in which the commander describes success and the purpose behind what he or she wants to achieve.

    Unfortunately though, in any combat operation, there is a chance that a unit will find itself without its leader. Whether a simple, temporary communications glitch, or a serious injury or death, there can be a sudden leadership vacuum.

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  • Leaders

    Leaders are the people who can envision a destination and inspire a group of others to join them on the journey to that goal.

    Leadership can be both formal and informal. In formal leadership roles, the leader is designated by someone of higher authority to act in that capacity. The role may be a permanent position, or it may be a temporary assignment, such as a kaizen leader.

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  • Leadership

    In short, leadership is the act of one person uniting and motivating others toward a common goal.

    Leadership is part natural (as in “natural-born”), but is refined greatly through training, practice, and constant learning. Confidence in oneself is a key component of leadership.

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  • Lean (+Video)

    In its original definition, Lean is a form of continuous improvement that springs from the Toyota Production System (TPS). The term ‘Lean’ was popularized in the landmark book, Lean Thinking. It focuses on improving flow, with a heavy emphasis on reducing inventory.

    Nowadays, though, there is also a broader definition. Lean has come to mean any effort to do more with less. For some, it has even become interchangeable with the terms ‘waste reduction’, ‘continuous improvement’, or ‘process improvement’.

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  • Lean Accounting

    Accounting is a necessary part of any business. It is critical to know if the actions a company is taking are making it profitable, or if they are causing the business to bleed cash. Accounting in the best of situations has its challenges. But the advent of lean has made for some tricky situations in which traditional accounting methods may actually show Lean efforts as having a negative impact on financial performance.

    This is most pronounced in the methods traditional accounting uses to account for inventory and for standard costs. For example, traditional accounting shows that lower standard costs mean more profit. Lean accounting, however, understands that creating flow through setup reduction and running smaller batches will increase standard costs, but reduce overall costs of production.

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  • Lean Implementation

    A Lean implementation is the initial period of time when a company or organization is putting Lean in place.

    While most people look at it as a discrete event, in truth, there is often a long period where different parts of an organization are rolling out Lean. So, different departments within the company may be at different stages in their Lean implementation.

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  • Lean Manufacturing (+Video)

    Lean manufacturing is the business philosophy of relentlessly eliminating waste to improve flow in a production environment.

    Lean manufacturing has evolved into something far more widespread, and now Lean encompasses offices, construction, service, hospitals, and even government.

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  • Lean Office (+14-Page Lean PDF +Video)

    Lean Office Lean Term on PDF

    Despite its reputation as a shop floor philosophy, Lean has migrated to office environments. While there are variations on how it is applied, it has unquestionably passed its infancy, and is providing stellar improvements to administrative operations.Visit this Lean term page to download a FREE 14-Page PDF about the Lean Office.

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  • Lean Six Sigma

    Lean Six Sigma is the combination of Lean and Six Sigma into a single business philosophy.

    Lean is commonly thought of as a way to improve process speed. Six Sigma is primarily considered a quality tool. In truth, though, the two both share a lot of the same tools, and both focus heavily on problem solving.

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  • Lean Tools

    Lean tools are the individual components of a Lean system.

    The most common Lean tools are:

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  • Level Loading

    Level loading, also known as heijunka, is the practice of using demand estimates to establish an average production level.

    By smoothing the demand, Lean companies can standardize their processes better, and can match their capacity to the current needs of the customer. Level loading on a mixed-model production line balances the mix of products in addition to the total demand by specifying a standard sequence of models. (i.e. ABABC ABABC)

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  • Line Balancing

    Line balancing is the act of balancing the cycle times of the workers on a production line to the takt time.

    When everyone has a cycle time that matches the takt time, work flows efficiently. If a line is not balanced, it either has waiting waste where team members are standing around at the end of each cycle, or the line can’t keep up with demand.

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  • Line Shift

    A line shift is a synchronized movement of all the production work on an assembly line. It can be done in several ways.

    • Manually, in which each person pushes their work to the next station on a signal.
    • On an indexed moving line, in which the line moves and then stops. The movement may be triggered manually, or automatically.
    • On a continuously moving line, in which the movement of the work units never stops. Rather, the conveyor crawls along as a snail’s pace past the assembly workers.
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  • Line Stop (+5-Page Lean PDF)

    Line Stop Lean Term on PDF

    Line stops are an important part of both protecting quality and investigating problems in real time. Lean more and get a 5-page Line Stop Lean Term on PDF.

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  • Little’s Law

    Little’s Law is a basic mathematics equation for calculating lead time. In the layman’s version, it says:

    Lead time = Number of units in WIP / Average Production Rate

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  • Low Hanging Fruit

    Low hanging fruit describes the big bang for the buck projects that can jump-start a Lean implementation.

    They are the problems and opportunities that are easy to address with relatively little effort.

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  • Luck (+ 6-Page Lean PDF)

    Luck Lean Term on PDF

    Luck plays a role in the success of your organization, but it is possible to stack the deck in your favor and prepare for bad luck. Visit this Lean term page to learn more and download a FREE 6-Page PDF about luck in Lean operations.

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