“A” Lean Terms

AP is an abbreviation for “accounts payable”. It is the money that companies owe in the short term and is recorded under current liabilities. In general, companies want to pay debts off as far in the future as they can (provided there is no financing charges) and get paid right Read more…

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. The key to A3 management is that there must be management problem solving processes in place. This means that there is a specific way Read more…

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. It Read more…

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 Read more…

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 Read more…

ABC inventory is a method of grouping materials based on cost and usage to assign them different inventory management processes. Typically, the segmentation is done by calculating out the annual usage of the parts and labeling the top 70% of them (by total cost) as ‘A’ parts, the next 25% Read more…

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 the ceiling. Each of these things indicates that something just isn’t right. They are abnormal conditions. Read more…

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 larger variety of ways, but from the operations standpoint, human resource definitions Read more…

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 statistical analysis and is based on the required quality level, lot size, and sample size. The underlying premise of using Read more…

Accountability and authority are the yin and yang of leadership. Authority is the state of having power to give directions and make decisions. It is generally granted by an organization to individuals for the purpose of getting results in the areas they are responsible for. With authority comes the burden Read more…

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 Read more…

Accounts payable (AP) is an accounting term. It is the listings on a company’s financial statement of the obligations to pay off short term debt. This is most often in the form of bills for materials and services received and short-term loans. It also includes things like accrued payroll expenses Read more…

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. It is often confused with “precise.” The layman’s definition of precision is “a measure of how little variation there is in your system”. Lean Read more…

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, Read more…

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 Read more…

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. For example, if the processing time was 30 minutes and the lead time was 2 hours, the activity ratio would be Read more…

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 Read more…

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 Read more…

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 Read more…

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. The process is simple: Collect ideas, whether through brainstorming, VOC (voice of the customer) or some other Read more…

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 require it. Read more…

“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. Many instructors, especially those mentoring Lean students, live Read more…

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, Read more…

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 Read more…

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. See Also: Read more…

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. What this might mean in practice is that there is a statistical Read more…

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. Read more…

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 Read more…

The concept of amortization is that the initial payment for an intangible asset does not always correspond to the useful life of that asset. For example, let’s assume that your company bought the rights to a brand, such as “Twinkies”. That would be a sizeable expense that has to be Read more…

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. In the analysis step, one doesn’t necessarily look for solutions, just a Read more…

Analysis of variance, also known as ANOVA, is a sophisticated statistical modeling technique that looks at variation within and between two or more groups. This is a useful tool in Six Sigma because being able to recognize variation in results lets you zero in on the process that created that Read more…

Analysis paralysis is the act of bogging down a problem-solving effort by continuing to crunch data despite diminishing returns. Analysis of data is critical to problem solving. Without it, you are just guessing. But there comes a point where the effort stops paying off, and all it ends up doing Read more…

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. Essentially, the analytic hierarchy process breaks criteria into progressively smaller criteria, Read more…

The Analyze Phase of Six Sigma is the third phase of the DMAIC process. It is the phase where the relationship between the variables and outputs are established and quantified. This relationship is often called the ‘transfer function’ and is represented as Y=f(X). Y is the output and is determined Read more…

An andon light, in its most common use, is a status indicator for a work area. It generally has green, yellow, and red lights in a stack. As the operator experiences abnormal conditions, he or she lights a different color. The colors have meaning. Yellow might be a call for Read more…

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. It is a key component of policy deployment. Strategies are Read more…

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. Read more…

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. Car tire pressure rising after driving isn’t an anomaly. An unexpected, temporary increase would be. If one tire Read more…

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 Read more…

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 Read more…

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. Modern production processes and the sophistication of products, Read more…

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 focusing the Read more…

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 Read more…

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 Read more…

Asynchronous learning is the concept of teaching the same material to students at different times or places. It is also referred to as location independent learning. The format of this material can vary. It is commonly recorded video or audio programs but can be virtually any medium. Asynchronous learning does Read more…

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 Read more…

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. Internal: With internal attribution, the cause of the behavior is believed to be a function of the characteristics and personality traits of Read more…

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. Read more…

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 that people are supposed to be doing. In most cases, the term “audit” implies some structure to Read more…

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. Authority differs from leadership in that Read more…

An autoejector is a tool used to streamline production. It is also known by the Japanese term, hanedashi. In a cell where a single operator is running several machines, he will often work with multiple parts. That’s not to say it is a random number. There should be a defined Read more…

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 Read more…

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 Read more…

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. The productivity benefits of automation are obvious. An operator Read more…

Automation 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 Read more…

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. See Also: Jidoka

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 Read more…

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. OEE and Availability The term availability is a component of OEE or overall equipment effectiveness. This is a Read more…

“Average” is the layperson’s way of saying arithmetic mean. It is one of the measures of central tendency and is determined by taking the sum of all the data points in the set divided by the number of data points in the set. Average is a measure of central tendency Read more…