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ACCA Strategic Professional · Advanced Performance Management · Performance improvement models and techniques

Harlow Components manufactures brake parts. Its operations director wants to remove activities that consume time and resources but add nothing the customer is willing to pay for, such as excess inventory, waiting time and unnecessary movement of materials. Which approach is she primarily applying?

The director is applying Lean thinking. Lean defines value from the customer's perspective and removes waste such as excess inventory, waiting and unnecessary movement. Six Sigma instead targets process variation and defects, so it does not describe the focus on eliminating non-value-adding activities in the scenario.

  1. ALean thinking, which focuses on eliminating waste to create customer valueCorrect
  2. BSix Sigma, which focuses on reducing defects to 3.4 per million opportunities
  3. CKaizen costing, which sets annual cost reduction targets for each product
  4. DTarget costing, which derives allowable cost from market price less required margin

Explanation

Lean thinking identifies value from the customer's viewpoint and removes non-value-adding activities (waste), such as inventory, waiting and transport. Six Sigma targets variation and defects, not waste in flow, so it is not the primary approach described.

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