Lean management, also called Lean manufacturing, or just Lean, is a business methodology that helps organizations reach their most critical strategic objectives. Although it started in manufacturing, Lean management is now used by organizations of all types and sizes. It is popular in organizations as diverse as healthcare, construction, and software development.
The Lean management approach is built around three straightforward concepts:
Deliver value as defined by your customer
Eliminate waste, which is everything that does not bring value
Practice continuous improvement
The fundamental belief that supports these ideas is that success requires respect for people.
Perhaps the simplest Lean management definition is continuous improvement structured to deliver maximum customer value.
The Origin of Lean
Following WWII, Toyota set out to improve its products while keeping costs down by minimizing processes that don't add value to the product. As a result, they introduced significant improvements to efficiency, cycle time, and productivity.
While they didn't call it Lean, that name was introduced by John Krafcik in a 1988 article called "The triumph of the Lean Production System," the principles that Toyota practiced eventually evolved into the Lean management principles.
The 5 Lean Management Principles
1. Define Value: The primary goal of every company is to provide a product or service for which a customer will be willing to pay. This means providing value that the customer recognizes.
Value is found in solving problems for the customer. Anything that doesn't contribute to this end is considered waste by Lean organizations.
2. Map the Value Stream: Value stream mapping involves mapping the workflow of the entire organization, including all the actions, people, and processes that create value for the customer. In so doing, you will be able to identify what is being done that is not bringing value.
Once the value stream is mapped, it will be easier to identify which processes can be targeted for reduction or elimination.
3. Create Continuous Workflow: When the value stream is clear, the next step is to ensure that the flow of value is continuous and uninterrupted.
This step usually requires cross-functional collaboration, and it is an ongoing objective that needs to be constantly monitored. Bottlenecks and interruptions are best identified through visual management.
5. Manage a Pull System: To achieve continuous workflow, Lean organizations develop a pull system in which work is only pulled forward into the following process or action when there is a demand for it. A Pull system lets leaders optimize resource capacity and create products or services only when there is an internal or external customer need.
For example, Starbucks doesn't have a bunch of cups of coffee or Frappuccinos sitting around, hoping that someone will buy them. This would lead to a bunch of cold coffee and meltedFrappuccinos that must go to waste. So instead, the Barista doesn't begin making your order until you say what you want.
6. Practice Continuous Improvement: Implementing Lean is not a one-time event. Customer needs change over time. No system is isolated or static. Problems creep into even very well-managed processes. That's why continuous improvement practiced by every employee is a requirement for long-term success.
The Benefits of Lean Management
Lean management is so popular because it is flexible enough to fit the needs of each organization but still structured in a way that paves the path to success.
Lean organizations enjoy several key advantages:
Focus: Lean management helps leaders keep everyone focused on the imperative to create customer value with minimal waste.
Increased efficiency and productivity: When each manager and process operator focuses on delivering customer value, they become more productive and efficient because they are no longer distracted by unnecessary tasks.
Better use of human and material resources: When an organization limits production to actual demand, it employs more intelligent processes and effectively uses every resource.
Increased employee engagement: Lean management brings the organization's strategy to the ground level by engaging every employee in continuous improvement. Engaged employees are more productive, but they also stay with the organization longer and participate in their professional development.
The 8 Wastes of Lean
Some forms of waste, like the Starbucks example above, are easy to spot and fix. But waste can hide in unexpected ways that are not so apparent. That's why Lean practitioners have developed eight common categories of waste.
Transportation: Moving raw materials, products, supplies, or other items more frequently or over a longer distance than necessary constitutes transportation waste.
Motion: Similarly, moving people or equipment in a way that does not add value is a waste of motion.
Inventory: Storing more raw materials, finished products, supplies, or other items results in the waste of inventory.
Waiting: The waste of waiting occurs when a process is stalled because the required inputs are not available. Waiting means that there is a block inflow.
Over-production: Over-production happens work-in-progress or products are created before the customer or internal process needs them. If there is over-production, the Pull system is not being utilized.
Over-processing: When features, packaging, or information is added to a product or service that the customer does not need, over-processing has occurred.
Defects: Quality is an essential ingredient of Lean. Defects and rework are extraordinarily wasteful and must be addressed with haste.
Human potential: The waste of human potential hasn't always been included in the wastes of Lean, but today's leaders know that when their team's talent is not utilized to its full potential, a regrettable waste occurs.
Over the years, organizations have developed several specific techniques for supporting their Lean efforts. These tools can be used within the Lean framework or as stand-alone problem-solving tools.
Standard Work: It is impossible to implement structured improvements if each process operator performs their tasks in a unique or inconstant way. That's why the first thing that most Lean organizations do is define the current best practice for any operation or task and insist that it is used constantly. Then, when it is time for improvement, the Standard work is changed.
PDSA: Plan, Do, Study, Adjust (PDSA) is a structured improvement cycle that gives the organization a standard method for implementing positive change.
Catchball: Although the concept is simple, Catchball is an excellent path to employee engagement in problem-solving. Someone starts by making a problem statement or an idea for improvement and then "passing" it back and forth between all stakeholders. As the idea moves around, each person adds feedback, and the result is a more refined idea and course of action.
Kanban Boards: Kanban boards are an excellent way to visualize work in progress, ensure seamless flow, and enforce the Pull system.
The 5 Whys: The idea behind the 5 Whys technique is that lasting improvement requires understanding the root cause of problems and addressing them directly. If you state a problem and then ask Why eventually, the root cause will be revealed. Five times usually gets there, but a particular issue may require more or less.
Fishbone Diagrams: Another valuable problem-solving technique is the fishbone diagram. It's a chart that looks like the skeleton of a fish, with the head representing the problem and each of the "bones" representing a potential cause. The structure guides the team to consider each of the most common categories of root causes.
While it is not comprehensive, we hope this introductory Lean management definition has been helpful. If you consider adopting the approach, KaiNexus is a resource that can help you along your journey.