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Glossary

Yellow Belt

Sometimes referred to as Green Belts (GB) -- varies from business to business. A Yellow Belt typically has a basic knowledge of Six Sigma, but does not lead projects on their own, as does a Green Belt or Black Belt. In addition, Yellow Belts may often be responsible for running smaller process improvement projects using the PDCA (Plan, Do, Check, Act) methodology. PDCA, often referred to as the Deming Wheel, enables Yellow Belts to identify processes that could benefit from improvement. These smaller Yellow Belt projects often get escalated to the Green Belt or Black Belt level where a DMAIC methodology is used to maximize cost savings using Statistical Process Control. (See Six Sigma Belts)



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Lean Advisors - Lean Definitions - Work In Progress - Lean Manufacturing | Lean Tools | Lean Training | Lean Healthcare | Lean Consulting

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Glossary

Work In Progress

Items (material or information) between machines or processes or activities waiting to be processed.



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Lean Advisors - Lean Definitions - Work Cell - Lean Manufacturing | Lean Tools | Lean Training | Lean Healthcare | Lean Consulting

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Kaizen Institute - LEAN ADVISORS

The KAIZEN Lean & Green™ Solution
Environmental Responsibility Driving Economic Performance
The Triple Bottom Line: People, Planet, Profit
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Glossary

Work Cell

see cell



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Lean Advisors - Lean Definitions - WIP - Lean Manufacturing | Lean Tools | Lean Training | Lean Healthcare | Lean Consulting

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Kaizen Institute - LEAN ADVISORS

The KAIZEN Lean & Green™ Solution
Environmental Responsibility Driving Economic Performance
The Triple Bottom Line: People, Planet, Profit
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Glossary

WIP

Items (material or information) between machines or processes or activities waiting to be processed.



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Lean Advisors - Lean Definitions - Waste - Types - Lean Manufacturing | Lean Tools | Lean Training | Lean Healthcare | Lean Consulting

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Kaizen Institute - LEAN ADVISORS

The KAIZEN Lean & Green™ Solution
Environmental Responsibility Driving Economic Performance
The Triple Bottom Line: People, Planet, Profit
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Glossary

Waste - Types

  1. Overproduction

  2. Inventory

  3. Defects

  4. Overprocessing

  5. Motion

  6. People's Talents

  7. Waiting

  8. Transport

  9. Re-Prioritzation



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Lean Advisors - Lean Definitions - Waste - Lean Manufacturing | Lean Tools | Lean Training | Lean Healthcare | Lean Consulting

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Kaizen Institute - LEAN ADVISORS

The KAIZEN Lean & Green™ Solution
Environmental Responsibility Driving Economic Performance
The Triple Bottom Line: People, Planet, Profit
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Glossary

Waste

Anything that does not add value to the final product or service, in the eyes of the customer. An activity the customer wouldn't want to pay for if they knew it was happening.



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Lean Advisors - Lean Definitions - Visual Factory - Lean Manufacturing | Lean Tools | Lean Training | Lean Healthcare | Lean Consulting

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Kaizen Institute - LEAN ADVISORS

The KAIZEN Lean & Green™ Solution
Environmental Responsibility Driving Economic Performance
The Triple Bottom Line: People, Planet, Profit
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Glossary

Visual Factory

An environment where it is easy for everyone to 'see' the current status of the process or 'system' and the visual give immediate information to the individuals to understand 'how the operation is doing'.



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Lean Advisors - Lean Definitions - Variable Costing - Lean Manufacturing | Lean Tools | Lean Training | Lean Healthcare | Lean Consulting

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Kaizen Institute - LEAN ADVISORS

The KAIZEN Lean & Green™ Solution
Environmental Responsibility Driving Economic Performance
The Triple Bottom Line: People, Planet, Profit
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Glossary

Variable Costing

Adds all traceable costs of resources used to unit-level costs. The contribution margin (under variable costing) is sales revenue minus all variable cost.



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Lean Advisors - Lean Definitions - Variable Cost - Lean Manufacturing | Lean Tools | Lean Training | Lean Healthcare | Lean Consulting

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Kaizen Institute - LEAN ADVISORS

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Environmental Responsibility Driving Economic Performance
The Triple Bottom Line: People, Planet, Profit
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Glossary

Variable Cost

Cost that change in total proportion to changes in the related level of total activity or volume.



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Lean Advisors - Lean Definitions - Value Stream Mapping - Lean Manufacturing | Lean Tools | Lean Training | Lean Healthcare | Lean Consulting

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Kaizen Institute - LEAN ADVISORS

The KAIZEN Lean & Green™ Solution
Environmental Responsibility Driving Economic Performance
The Triple Bottom Line: People, Planet, Profit
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Glossary

Value Stream Mapping

A pencil-and-paper tool used: a) to follow a product or information (or both) activity path from beginning to end and draw a visual representation of every process (value and non-value) in the material and information flows. b) then to design a future state map which has waste removed and creates more flow and c) to end up with a detailed implementation plan for the future state.



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Lean Advisors - Lean Definitions - Value Stream - Lean Manufacturing | Lean Tools | Lean Training | Lean Healthcare | Lean Consulting

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Kaizen Institute - LEAN ADVISORS

The KAIZEN Lean & Green™ Solution
Environmental Responsibility Driving Economic Performance
The Triple Bottom Line: People, Planet, Profit
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Glossary

Value Stream

All activities, both value added and non value-added, required to bring a product group or service from order to the hands of the customer, and a design from concept to launch to production to delivery.



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Lean Advisors - Lean Definitions - Value Added - Lean Manufacturing | Lean Tools | Lean Training | Lean Healthcare | Lean Consulting

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Kaizen Institute - LEAN ADVISORS

The KAIZEN Lean & Green™ Solution
Environmental Responsibility Driving Economic Performance
The Triple Bottom Line: People, Planet, Profit
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Glossary

Value Added

Activities or work essential to ensure a product or service meets the needs of the customer.



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Lean Advisors - Lean Definitions - Value - Lean Manufacturing | Lean Tools | Lean Training | Lean Healthcare | Lean Consulting

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Kaizen Institute - LEAN ADVISORS

The KAIZEN Lean & Green™ Solution
Environmental Responsibility Driving Economic Performance
The Triple Bottom Line: People, Planet, Profit
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Glossary

Value

A product or service's capability provided to a customer at the right time, at an appropriate price, as defined in each case by the customer.



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Lean Advisors - Lean Definitions - Traditional Cost Systems - Lean Manufacturing | Lean Tools | Lean Training | Lean Healthcare | Lean Consulting

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Kaizen Institute - LEAN ADVISORS

The KAIZEN Lean & Green™ Solution
Environmental Responsibility Driving Economic Performance
The Triple Bottom Line: People, Planet, Profit
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Glossary

Traditional Cost Systems

see Variable Costing



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Lean Advisors - Lean Definitions - TQM - Lean Manufacturing | Lean Tools | Lean Training | Lean Healthcare | Lean Consulting

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Kaizen Institute - LEAN ADVISORS

The KAIZEN Lean & Green™ Solution
Environmental Responsibility Driving Economic Performance
The Triple Bottom Line: People, Planet, Profit
Download brochure | Watch Video | Green Funding Options

Glossary

TQM

A systematic customer focused approach to continuous performance improvement. A philosophy and set of guiding principles which represent the foundation for continuously improving the organization through employee involvement. The application of quantitative methods and human resources to improve the materials and services supplied to and by an organization and all the processes within the organization and the degree to which the needs of the customer are met. The integration of fundamental management techniques, existing improvement efforts, and technical tools, under a disciplined approach to focus on continuous improvement.



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Lean Advisors - Lean Definitions - TPM - Lean Manufacturing | Lean Tools | Lean Training | Lean Healthcare | Lean Consulting

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Kaizen Institute - LEAN ADVISORS

The KAIZEN Lean & Green™ Solution
Environmental Responsibility Driving Economic Performance
The Triple Bottom Line: People, Planet, Profit
Download brochure | Watch Video | Green Funding Options

Glossary

TPM

A series of methods, originally pioneered by Nippondenso (a member of the Toyota group), to ensure that every machine in a production process is always able to perform its required tasks so that production is never interrupted.



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Lean Advisors - Lean Definitions - Total Quality Management - Lean Manufacturing | Lean Tools | Lean Training | Lean Healthcare | Lean Consulting

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Kaizen Institute - LEAN ADVISORS

The KAIZEN Lean & Green™ Solution
Environmental Responsibility Driving Economic Performance
The Triple Bottom Line: People, Planet, Profit
Download brochure | Watch Video | Green Funding Options

Glossary

Total Quality Management

A systematic customer focused approach to continuous performance improvement. A philosophy and set of guiding principles which represent the foundation for continuously improving the organization through employee involvement. The application of quantitative methods and human resources to improve the materials and services supplied to and by an organization and all the processes within the organization and the degree to which the needs of the customer are met. The integration of fundamental management techniques, existing improvement efforts, and technical tools, under a disciplined approach to focus on continuous improvement.



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Lean Advisors - Lean Definitions - Total Productive Maintenance - Lean Manufacturing | Lean Tools | Lean Training | Lean Healthcare | Lean Consulting

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Kaizen Institute - LEAN ADVISORS

The KAIZEN Lean & Green™ Solution
Environmental Responsibility Driving Economic Performance
The Triple Bottom Line: People, Planet, Profit
Download brochure | Watch Video | Green Funding Options

Glossary

Total Productive Maintenance

A series of methods, originally pioneered by Nippondenso (a member of the Toyota group), to ensure that every machine in a production process is always able to perform its required tasks so that production is never interrupted.



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Lean Advisors - Lean Definitions - Throughput Costing - Lean Manufacturing | Lean Tools | Lean Training | Lean Healthcare | Lean Consulting

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Kaizen Institute - LEAN ADVISORS

The KAIZEN Lean & Green™ Solution
Environmental Responsibility Driving Economic Performance
The Triple Bottom Line: People, Planet, Profit
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Glossary

Throughput Costing

Counts only unit-level costs as the cost of a product or service. All other costs of resources used are counted as operating costs (or expenses). The throughput (under throughput costing) is sales revenue minus all unit-level spending for direct costs.

Timing is the key in distinguishing between absorption, variable, and throughput costing. All manufacturing costs will ultimately be expensed under all three methods. Under throughput costing, only the unit-level spending for direct costs are included in the product cost. All other committed costs are expensed as period costs during the period in which they are incurred. Under variable costing, the fixed manufacturing-overhead costs are expensed during the period in which they are incurred. Under absorption costing, fixed manufacturing-overhead costs are held in inventory as product costs until the period during which the units are sold. Then those costs flow into cost-of-goods-sold expense.

Throughput, variable and absorption costing will not result in significantly different income measures in a JIT setting. Under JIT inventory and production management, inventories are minimal and as a result inventory changes are also minimal. The three methods result in significantly different income measures only when inventory changes significantly from period to period.



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Lean Advisors - Lean Definitions - Theory of Constraints - Lean Manufacturing | Lean Tools | Lean Training | Lean Healthcare | Lean Consulting

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Kaizen Institute - LEAN ADVISORS

The KAIZEN Lean & Green™ Solution
Environmental Responsibility Driving Economic Performance
The Triple Bottom Line: People, Planet, Profit
Download brochure | Watch Video | Green Funding Options

Glossary

Theory of Constraints

Theory of Constraints describes methods to maximize operating income when faced with some bottleneck and some non-bottleneck operations.



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Lean Advisors - Lean Definitions - Target Cost - Lean Manufacturing | Lean Tools | Lean Training | Lean Healthcare | Lean Consulting

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Kaizen Institute - LEAN ADVISORS

The KAIZEN Lean & Green™ Solution
Environmental Responsibility Driving Economic Performance
The Triple Bottom Line: People, Planet, Profit
Download brochure | Watch Video | Green Funding Options

Glossary

Target Cost

Is a function of the sales price and the organization's target profit margin. Target Cost is profit management. The four major steps of target costing are:


  • Determine the target price - this is the amount customers are willing to pay for a product or service with specified features and functions

  • Set the target cost, per unit and in total - the target cost is the market price less the required return. The total target cost is the per unit target cost multiplied by the expected number of sales units of product or service over its life.

  • Compare the total target cost to the currently feasible total cost to measure the cost reduction target - currently feasible total cost is the cost to make the product given current design and process capabilities. The difference between the total target cost and currently feasible cost is the cost reduction target.

  • Redesign or design products and processes to achieve the cost reduction target - this can be an iterative process until both the product or service and its cost meet marketing and financial objectives.




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Lean Advisors - Lean Definitions - Takt Time - Lean Manufacturing | Lean Tools | Lean Training | Lean Healthcare | Lean Consulting

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Kaizen Institute - LEAN ADVISORS

The KAIZEN Lean & Green™ Solution
Environmental Responsibility Driving Economic Performance
The Triple Bottom Line: People, Planet, Profit
Download brochure | Watch Video | Green Funding Options

Glossary

Takt Time

The rate of demand from the customer. Takt Time = Available Operating Time/Requirement



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Lean Advisors - Lean Definitions - Supermarket - Lean Manufacturing | Lean Tools | Lean Training | Lean Healthcare | Lean Consulting

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Kaizen Institute - LEAN ADVISORS