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What is Lean Thinking? The Framework for Customer Value

Posted by Kade Jansson

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Jul 8, 2021 3:23:57 PM

 

James Womack and Dan Jones are the founders of the Lean Enterprise Institute and the Lean Enterprise Academy (UK), respectively. Their book, Lean Thinking: Banish Waste and Create Wealth in Your Corporation, is considered by some to be the bible of Lean manufacturing. It was initially published in 1996 based on their in-depth study of Toyota’s fabled Toyota Production System (TPS).

The 5 Principles of Lean Thinking

Lean Thinking lays out the five Lean manufacturing principles: value, value streams, flow, pull, and perfection. Of course, these principles apply to organizations far beyond manufacturing. Here’s some insight into what Womack and Jones meant by each.

Value

The Lean continuous improvement approach begins with a detailed understanding of what value the customer assigns to products and services. This determines what the customer will pay. Establishing value allows organizations to create a top-down target price. The cost to produce the products and services is then determined. The organization focuses on eliminating waste so that it can deliver the value the customer expects at the highest level of profitability.

 

[Watch Now] How to Leverage Lean for Long-Term Success

 

The Value Stream

The value stream is the totality of the product’s entire life-cycle from the raw materials through to the customer’s use of and eventual disposal of the product. In order to eliminate waste, the ultimate goal of Lean, there must be an accurate and complete understanding of the value stream. Processes are examined to determine what value is added. Steps, materials, features, and movements that do not add value are eliminated. According to Womack and Jones, value stream mapping will almost always reveal three types of waste. 

  • Many steps will be found to create value unambiguously.
  • Many other steps will be found to create no value but to be unavoidable with current technologies and production assets.
  • Many additional steps will be found to create o value and be immediately avoidable.

Flow

Understanding flow is essential to the elimination of waste. If the value stream stops moving forward at any point, waste is the inevitable by-product. The Lean manufacturing principle of flow is about creating a value chain with no interruption in the production process and a state where each activity is entirely in step with every other.

Pull

The Lean principle of pull helps ensure flow by making sure that nothing is made ahead of time, building up work-in-process inventory, and stopping the synchronized flow. Rather than using the traditional American manufacturing approach of pushing work through based on a forecast and schedule, the pull approach dictates that nothing is made until the customer orders it. This requires a great deal of flexibility and short design to delivery cycle times. It also requires an efficient way of communicating what is needed for each step in the value chain.

Perfection

Lean practitioners strive to achieve nothing short of perfection. The march toward the perfect process happens step by step as continuous improvements address root causes of quality problems and production waste. The relentless pursuit of perfection is what drives users of the approach to dig deeper, measure more, and change more often than their competitors.

 

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Lean Process Definition

Given these principles, the definition of a Lean process becomes apparent. A Lean process must have:

  • A standard operation that sets the baseline for continuous improvement.
  • Defined performance indicators that are consistently measured.
  • Visualized indications of flow and pull.
  • A built-in problem-solving process.

We highly recommend that you pick up a copy of Lean Thinking, which goes into far greater depth about each of these principles of Lean manufacturing. It also offers insightful and unexpected examples across almost every industry. These ideas form the foundation of the Lean approach transforming countless corporations, giving them a leg up on the competition and a clear path to both profitability and delighted customers.

Topics: Lean, Daily Lean Management

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