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).
What Womack and Jones realized is that every outcome is the result of a process. Process thinking in operations management requires leaders and workers to view businesses as a set of related processes that work together rather than a group of departments that each support a specific function.
These ideas are widely used by businesses of any industry to better design, track, and optimize business processes operations. Companies have not done away with functional departments. However, they view the work departments do differently. A department can't exist as a silo. It receives inputs from other functions, and it provides outputs that other departments must consume to complete their work.
In short, each function or person is a contributor to one or more business processes. So, instead of managing departments, process thinking relies on managing entire operations. A process might move through a series of teams or functions, each with its own requirements, but the purpose of each one is to create value for the customer, and value is what matters.
The 5 Principles of Process Thinking
"Lean Thinking" lays out the five principles: value, value streams, flow, pull, and perfection. Here's some insight into what Womack and Jones meant by each.
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. Finally, the organization focuses on eliminating waste to deliver the value the customer expects at the highest level of profitability.
The Value Stream
The value stream is the totality of the product's entire life-cycle from the raw materials to the customer's use 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. First, processes are examined to determine what value is added. Next, 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 no value and be immediately avoidable.
Understanding flow is an essential element of improving performance. 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.
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.
Lean practitioners strive to achieve nothing short of perfection. The march toward the perfect process operations 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.
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.
The Benefits of Process Thinking in Operations Management
Here are a few of the top reasons why organizations are moving away from traditional, function-based thinking to a process-based approach that leverages Lean principles:
Process Thinking is Wholistic
When managers focus only on the work that each department does, they can lose sight of the need to deliver customer value aligned with the organization's strategic goals. In addition, if the workers in each department don't communicate effectively with other areas that are "customers" of their outputs, the overall product will suffer.
Process thinking encourages managers at every level to focus on the system-wide business process and their contribution to the ultimate result.
Process Thinking Helps Solve Difficult Challenges
The best way to tackle complex challenges is to break them down into their component parts and examine each one. Very often, organizations find that process breakdowns occur when work moves from one functional area to another. Taking a systems view of operations is an excellent way to identify problems that block flow, introduce waste, and fail to contribute to customer value.
Process Thinking Improves Quality
Every organization should strive for a consistent, predictable result that matches customer requirements. This means supporting processes that always work the same way every time they happen. Variation is the opposite of quality and the enemy of perfection.
We highly recommend that you pick up a copy of Lean Thinking, which goes into far greater depth about each of these Lean manufacturing principles. 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.