Philip Caldwell, former Chairman and CEO of Ford Motor Company said of the book, Lean Thinking, by James P. Womack and Daniel T. Jones, “Truly remarkable .... the most comprehensive, instructive, mind-stretching and provocative analysis of any major industry I have ever known.” Caldwell is not the only one with high praise for the work. Peter Drucker himself called it, “A very important book.” In it, Womack and Jones lay out the five principles of Lean manufacturing. Although the book is primarily focused on Toyota’s achievement in revolutionizing manufacturing, the principles of Lean manufacturing can be applied to almost any industry.
Here are 5 principles of Lean manufacturing:
The value a customer places upon products and services determines how much money they are willing to pay for them (or if they want to pay for it at all). Lean thinkers insist on understanding exactly what drives customer value, including understanding what problem they are trying to solve. Great focus is placed on what the customer will pay for very specific products, features and service offerings. Once this is determined, the producer if responsible for determining how cost and waste can be eliminated so that the product can be delivered profitably at the price the customer is willing to pay.
2. Value Streams
A value stream includes all the processes, steps, and materials necessary to place the product (or service) in the hands of the customer. Lean organizations seek to document and understand every aspect of their value streams, often using value stream mapping software to support this effort. This analysis will usually reveal time delays, activities that create value, activities that don’t create value but can’t be eliminated due to current technical or production limitations, and activities that create no value, making them wastes that become opportunities for improvement.
The “stream” analogy is continued in the third principle of flow. Just as water flows freely downstream, the value chain should experience a smooth progression from start to finish. Anything that interrupts the flow of value contributes to the Lean waste of waiting and decreases value to the customer. Maintaining flow requires careful synchronization of each aspect of production and delivery.
Another waste that Lean manufacturing attempts to eliminate is excess work-in-progress inventory. Rather than “pushing” production based on a forecast or schedule, those who take the pull approach ideally don’t make anything until the customer (internal or external) orders it. Visualization tools like Kanban boards help to provide a mechanism for informing each step in the chain what they need to produce to meet the customer’s needs.
The final Lean manufacturing principle from Lean Thinking is the relentless pursuit of perfection. Lean thinkers implement systems and measurements that continuously seek opportunities to improve, speed, and reduce the cost of each step of the value stream. When problems that impact quality arise, lean thinkers don’t apply Band-Aids, instead they seek and address root causes. Moving closer to perfection requires the involvement of every member of the team from the C-suite to the front lines.
The beauty of these Lean principles is that they can be applied whether you are assembling automobiles, moving a patient from the waiting room to discharge, or developing a new software feature. Creating customer value while eliminating waste is the “secret sauce” of profitability no matter what you ultimately sell.