Lean manufacturing is a business methodology that is based on tools and techniques implemented at Toyota in their post-WWII efforts to improve the quality of its automobiles. They called it simply "The Toyota Production System" and “The Toyota Way.” Other manufacturers recognized the success the company enjoyed and applied the approach. Visits to Toyota to observe Lean manufacturing in action are common to this day.
The beauty of Lean is that it can be applied to almost any type of organization. Its pillars of continuous improvement and respect for people are universally relevant. Today, Lean is used in healthcare, high-technology, construction, education, services, and government.
Lean Manufacturing Principles
The five core principles of Lean apply to more than just widgets moving through a factory. They are relevant to countless organizations.
Value – The objective of a Lean organization is to provide value to the customer. Value is defined by what the customer wants and is willing to pay for. In manufacturing, value is contained in the item that is produced whether it’s a car or a frozen dinner. In healthcare, value is represented by improved patient outcomes. Value in software development is offered in the form of features and functionality. Every organization should be able to clearly define what value means to them.
Value Streams – The value stream is the entire lifecycle of a product from development through the customer’s use and disposal. Lean teaches that it is essential to understand the value stream and eliminate anything that does not add value. The value stream is perhaps most visible in manufacturing, but it exists in every sector. For example, in healthcare, patient check-in and registration is part of the value stream as are diagnostic tests and prescriptions for medication.
Flow – The next principle of Lean manufacturing is flow. Once the value stream is defined, it should flow smoothly from beginning to end. If the value stream stops moving forward, waste is necessarily created. In a commercial kitchen, for example, if there is a backup on the meat station, the garnish for those entrees that was ready on time, may sit too long and have to be discarded.
Pull – The best conditions for a free-flowing value stream exist when nothing is created until the customer orders it. The goal is to avoid excess inventory of work in progress. This principle gave rise to the concept of just-in-time manufacturing, but it applies to other industries as well. For instance, Lean software development teams avoid creating a backlog of code to be tested by paying attention to the workload of QA resources.
Perfection – Lean leaders seek to steer their organization toward a perfect value stream by engaging in a serious of continuous improvements. Lean isn’t about a grand gesture or revolutionary change. It’s about making small changes daily, at every level of the organization, to deliver value and eliminate waste. The relentless pursuit of perfection makes sense whether you’re running a global shipping organization or a hair salon.
The 8 Wastes of Lean Manufacturing
Although it’s about much more than that, Lean is most commonly associated with the focus on eliminating waste. This doesn’t mean doing more with less; it means paying thoughtful attention to customer value and avoiding anything that doesn’t enhance it. There are eight wastes that Lean leaders in every sector seek to reduce.
Inventory – Excess inventory can mean parts, paperwork, office supplies, or medical equipment. If you don’t need it in the immediate future, it is wasting capital, time, and space.
Motion – The waste of motion involves unnecessary or over complex movement made by people or machines. If the copier and the paper are on opposite sides of the building, the waste of motion will occur. It is commonly found in hospitals, schools, construction sites, and office buildings.
Transportation – The waste of transportation is similar to the waste of motion, but it involves the unnecessary movement of things such as inventory or equipment.
Waiting – Waiting happens when one process is ready for input, but the work-in-progress isn’t prepared. Going back to our software development example, if the QA team is ready, but the code isn’t, the waste of waiting will occur.
Over Processing – Over processing means putting more work or complexity into something than is valuable to the customer. Over processing might mean unnecessary paperwork, product features no one uses or diagnostic tests that aren’t necessary.
Over Production – Over production means producing more of a product or service than the market demands. In retail, over production leads to clearance sales.
Defects – Defects are perhaps the most apparent form of waste. Software bugs, misdiagnoses, poor customer service, and late arrivals are all just as wasteful as an obvious defect in a manufactured part.
The reason that Lean applies so well beyond its original scope is that every organization is in the business of manufacturing value in one way or another. A perfect value stream is something to work toward no matter what you have to offer.