The Lean methodology is an evolution of the Toyota Production System that the Japanese automaker implemented following World War II to improve the efficiency and flexibility of its manufacturing. Two important books, The Machine That Changed the World (1990) by James P. Womack, Daniel Roos, and Daniel T. Jone and Lean Thinking (1996) by James P. Womack and Daniel T. Jones, outlined the structure and principles for the Lean method.
Although Lean got its start in manufacturing, today it is widely used across the globe in every sector including logistics and distribution, services, retail, healthcare, construction, maintenance, and even higher education.
Two Guiding Concepts
Two guiding concepts are the heart of the Lean methodology. An organization can not practice Lean without embracing them both.
1. Respect for People
Lean thinkers recognize that the best ideas often come from people who are directly responsible for producing the product or providing the services. They turn top-down management on its head and give those who are closest to the product or the customer to have an equal voice.
One basic Lean practice involves managers going to the “gemba” or the place where the work gets done to see workspace conditions and process activities first hand, giving frontline workers the opportunity to share insights and answer questions. This process often results in opportunities to improve.
2. Continuous Improvement
Lean leaders believe that processes can always be improved and that improvement is a daily activity that is the responsibility of everyone in the organization. Structure is applied with an improvement cycle such as PDSA (Plan, Do, Study, Act) or DMAIC (Define, Measure, Analyze, Improve, Control.) Often continuous improvement software is used to organize, measure, and report on Lean activities.
Five Core Principles
Womack and Jones laid out five core principles for the Lean methodology, giving leaders a framework under which to operate.
Lean starts by understanding what value the customer ascribes to the offered product or services. All value is defined by the customer, not the producer. The price is based on what the customer is willing to pay that determines the maximum allowable cost to produce the product. The organization then focuses on eliminating waste so that they can deliver what the customer wants with the highest possible margins.
2. The Value Stream
The value stream represents the sum of the product’s entire life-cycle from research and development through to the customer’s use of the product. A deep understanding of the value stream is necessary to achieve maximum value and eliminate waste. Every process is examined to see what value it adds. Processes, features, and materials that don’t add value are removed.
The value stream should flow seamlessly without interruption or delay. The Lean method seeks to have every process entirely in sync with every other. A smooth process flow is one of the conditions necessary for just-in-time production.
What makes flow possible is the idea of pull. In Lean, pull means ensuring that nothing is made before it is needed. Instead of creating work based on a forecast and schedule, in a Lean organization, nothing is made until the internal or external customer orders it. This makes shorter delivery cycle times possible and increases flexibility. Of course, it requires a solid way of communicating what is needed in each step of the value chain. The Lean technique of Kanban, using visual cues to communicate process flow, is widely used.
In line with the guiding concept of continuous improvement, Lean practitioners exercise a relentless pursuit of perfection. They dig deeper into root causes of quality problems and waste, apply more rigorous measurements, and make incremental changes more effectively than their less successful competitors.
Perhaps the Lean methodology is most often associated with the goal of eliminating waste. The Lean framework lays out eight distinct types of waste that should be identified and minimized or eliminated if possible. Everything that does not add value that the customer would be willing to pay for is considered a waste.
The waste of motion occurs when movements of people, materials, or machines are more complicated or occur more frequently than necessary.
Inventory of products or materials that is not immediately needed to fulfill customer needs is targeted for elimination. Too much stock creates waste in terms of storage, management, and loss of value over time.
The waste of waiting occurs when processes become out of sync and flow is interrupted. People and equipment are idle as they wait for work-in-progress to catch up. Waiting is a costly inefficiency.
Quality errors are a blatant waste of materials, time, and human effort.
Overproduction is an insidious waste because it contributes to many of the other wastes including inventory, motion, and transportation. The antidote is to produce only what is needed when it is required.
Lean leaders consider transportation a waste when materials are moved from one place to another in a way that does not add value for the customer.
Over-processing means putting more work, features, or cost into the product than the customer values. Lean leaders look to produce what is necessary and no more.
8. Human Potential
The waste of human potential occurs when a person’s skills, capabilities, and ideas are underutilized. It is perhaps the most challenging waste to recognize, but arguably the most damaging.
These are the fundamentals of the Lean methodology. Volumes have been written about the approach, so if you are ready to go beyond these basics, you have many resources at your disposal.