Fundamentals of Assurance for Lean Projects
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About this ebook
Lean is a mindset rather than a methodology; it is a way of thinking based on practices, strategies, tools and methods that can be applied to maximise value and minimise waste while ensuring that processes achieve corporate goals.
Lean helps organisations in all sectors achieve their objectives by facilitating a long-term culture shift focusing on three fundamental areas: waste , customer value and continuous incremental improvement. A good assurance review will ensure that resources are being applied efficiently and effectively to achieve these objectives.
Product overview
Fundamentals of Assurance for Lean Projects explains the fundamental concepts of Lean and how they can be applied to any project, including software development and organisational change.
It explains the jargon and dispels the mystique that surrounds Lean, providing readers with guidance and tips on performing audits or assurance reviews for Lean projects.
It also describes how Lean fits with Agile and Kanban, and how it can be combined with Six Sigma to create an efficient, high-quality approach. The book provides strong practical guidance for those tasked with providing assurance for Lean projects.
Read this book to learn about the approach and principles of Lean, the governance of Lean projects, and Lean audit and review. Topics covered include:
- The five main Lean principles and their significance.
- Tools used for root-cause analysis (the five whys and fishbone analysis).
- Defining and modelling customer value, and innovative responses to customer needs (the Kano model).
- Common causes of waste and how to improve flow.
- Customer pull and Kanban mechanisms to manage the associated flow of processing and information.
- The pursuit of perfection (Kaikaku and Kaizen) and total quality management (TQM).
- The application of Lean principles to software development.
- Practical suggestions for approaches to auditing.
As with all books in the Fundamentals Series, Fundamentals of Assurance for Lean Projects introduces the subject and includes references for those who would like to further investigate specific areas.
Christopher Wright
Chris Wright is a qualified accountant and Certified Information Systems Auditor (CISA) with over 30 years’ experience providing financial and IT advisory and risk management services. He worked for 16 years at KPMG, where he managed a number of IT due diligence reviews and was head of information risk training in the UK. He has also worked in a wide range of industry sectors including oil and gas, small and medium enterprises, public sector, aviation and travel.
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Fundamentals of Assurance for Lean Projects - Christopher Wright
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CHAPTER 1: INTRODUCTION TO THE HISTORY AND NATURE OF LEAN PROJECTS
Overview
Before we consider lean thinking/projects it is useful to clarify a definition, look at the history, and consider some of the variants of how it is used today. This is useful, as many organisations use the phrase ‘lean’ to merely mean cost cutting, without any real understanding of the approach or how it should be applied. These factors will be the main consideration of this chapter.
Lean – A definition
We could define lean thinking as:
Improving processes to ensure maximum customer value whilst minimising waste through continuous improvement.
Simple – and not a single Japanese word (more of that later)! Although there are many, and varied, definitions for lean manufacturing/thinking projects, they all generally focus on the same three key elements of customer value, minimising waste and continuous improvement.
The first part of the definition relates to ‘customer value’. Free markets should be based on what customer’s demand – a simple supply and demand model, unlike command economies where customers are ‘given what they get’. Most organisations claim they are delivering their customer’s needs. In some cases, however, this is not due to the pull effect, based on customer demands and preferences, that one would expect. There is still a push element, where suppliers are restricting which markets they operate in and how they offer their product – especially if they operate in an area of low competition.
The second component of the definition, ‘minimising waste’, helps to reduce cost so products can be sold at a competitive price, whilst still allowing a profit margin for the maker/provider and those involved in the supply chain to get the goods or services to the customer. Waste can come in many forms – we will consider these later in the book, based on the three Japanese terms:
1. ‘Muda’ (futility/uselessness) – e.g. doing actions that provide little or no benefit
2. ‘Mura’ (unevenness) – e.g. unnecessary downtime
3. ‘Muri’ (unreasonable/impossible) – e.g. unreasonable workloads or failure to effectively use the skill sets of staff available.
The third part of the definition is continuous improvement – constantly trying to improve the delivery of customer value and reduction of waste. This is true of the lean approach itself, where new thinking and tools are regularly being added to the publicly available lexicon of lean knowledge. As technology, fashions, working arrangements and economic conditions change, organisations need to also adapt and change.
So, the above definition of lean has nothing to do with its alternative dictionary meaning of slanting or ‘deviating from the perpendicular’ – although this could be a valid definition for some of the projects I have been asked to review that were no longer of value to the organisation!
The basic principles of lean should be intrinsic to all businesses – I have never come across a business that has a mission statement:
‘To carry on making products that no-one wants to buy, using maximum effort and creating loads of stuff we throw away – even though this has never worked for us in the past, we refuse to change!’
Lean is not a project methodology – it is more a way of thinking and considering a ‘process’ or series of steps, to achieve stated goals. In this case, maximising the value to customers whilst minimising waste. The lean ‘model’ is hence a mindset based on a group of practices, strategies, tools and methods that can be applied to help organisations achieve these objectives, whether they are in manufacturing, the service sector, or the public sector, such as the NHS. In all these cases, where lean has been successful it is because it has brought about a long-term evolution change of culture, to focus on the three fundamental areas (waste, customer value and continuous improvement).
We will explore the fundamental concepts of lean in the later chapters, including the challenges that we face as auditors and reviewers of lean initiatives and projects. Whilst much of this is based on the manufacturing sector, the principles, tools and techniques can be applied to any project, including software development and organisational change.
It is useful to first consider the history of lean and some of the variation and other approaches which overlap with lean (e.g. six sigma and agile).
History
If I want to provide a service or product there are three main ways I can do this:
1. Provide a highly tailored craft based solution to meet the specific requirements of every customer.
2. Provide a standard mass produced product.
3. Provide a lean based manufactured product.
The attributes of each of these are compared and contrasted in Table