Polythecnic University of Puerto Rico
MMP 6006 - Lean Manufacturing
Name: ____________________________ Section: ___________
A. Answer the following questions:
What constitutes value in a Lean Enterprise? How does this contrast to the “traditional definition” of value? Specify ways to define the value of a product or service.
Which steps are necessary to define the “value stream” of a product or service? In what categories a “production step” can be classified? Typically, who is involved in this definition process?
What steps are needed to change an enterprise from a “batch and queue” process to a “flow” process? In your opinion, which one is the hardest to implement? Why?
Lean manufacturing defines value of a product from the customer point of view. This seems like a simple change to the traditional concept. But this small change will redefine the way manufacturers think about manufacturing. Traditionally the price of a product is marked as the sum of the cost of manufacturing and the profit. But now the equation as changed. Lean manufacturing understands the fact that customer is not willing to pay for the wastes in the manufacturing processes. So the equation lean manufacturers will follow will look like: Profit = price – cost. Definitely you can’t increase your prices as you wish. Your competition will simply win the market if you try to increase the prices of your product. On the other hand, no one is doing business for nothing. As an organization you have to have profits. So you have two constrains. While you need your profits high, you must keep your costs competitive in the market. You are now left only with one variable, which is cost. How to balance this equation with this single variable. Obviously you will have to reduce the costs. The important fact is, customer gets the priority in balancing the above equation. Customer is not going to pay for the wastes in the system. Alternatively to compete in the markets and to earn profits, organization will have to eliminate its inefficiencies and reduce costs. For years manufacturers have created products in anticipation of having a market for