Lean is the latest buzzword in business circles. It is not a new concept.
It traces back to several decades. Lean production caught the imagination of manufacturing and service people in many countries.
Its presentations are now commonplace. The knowledge and experience base is expanding rapidly. Simply lean is about doing more with less of everything.
It is a systematic approach to identifying and eliminating waste through continuous improvement, flowing the product at the pull of the customer in pursuit of perfection.
Lean today
As these words are written, Toyota, the leading lean exemplar in the world, stands poised to become the largest automaker in the world in terms of overall sales. Regardless of its small failure in the recent past, its dominant success in everything from rising sales and market shares in every global market, not to mention a clear lead in hybrid technology, stands as the strongest proof of the power of lean enterprise.
This continued success has over the past two decades created an enormous demand for greater knowledge about lean thinking. There are literally hundreds of books and papers, not to mention thousands of media articles exploring the subject, and numerous other resources available to this growing audience.
As lean thinking continues to spread to every country in the world, business leaders are also adapting the tools and principles beyond manufacturing, to logistics and distribution, services, retail, healthcare, construction, maintenance, and even government. Indeed, lean consciousness and methods are only beginning to take root among senior managers and leaders in all sectors today.
The five principles of Lean
Lean principles are fundamentally customer value driven and are suitable for many business environments. There are five basic principles of lean Management.
- Understanding Customer Value
- Value Stream Analysis
- Create Flow
- Customer Pull
- Pursue Perfection
These five lean principles work together and are fundamental to the elimination of waste.
The next article will elaborate on eight types of wastes and how to eliminate those using lean principles.
Let's understand five principles of lean in brief before identifying different types of waste that can take place in an organization
Principle - 01 Understanding Customer Value.
The critical starting point for lean thinking is value. Value can only be defined by the ultimate customer. And it's only meaningful when expressed in terms of a specific product (goods or a service, and often both at once), which meets the customer's needs at a specific price at a specific time.
"Value must be externally focused. Only what your
customers perceive as value is important.
Why is it so hard to correctly define value? Partly because most producers want to make what they are already making and partly because many customers only know how to ask for some variant of what they are already getting. When providers or customers do decide to rethink value, they often fall back on simply formulas, lower cost, and increased product variety through customization, instant delivery, rather than jointly analyzing value and challenging old definitions to see what's really needed.
Principle -02 Value Stream Analysis
Once you understand the value that you deliver to your customers, you need to analyze all the steps in your business processes to determine which ones actually add value. If an action does not add value, you should consider changing it or removing it from the process. The value stream is the set of all the specific actions required to bring a specific product through the critical management tasks of any business. Identifying the entire value stream for each product is the next step in lean thinking, a step which firms have rarely attempted but which almost always exposes enormous, indeed staggering, amounts of waste.
Principle -03 Flow
Instead of moving the product from one work centre to the next in large batches, production should flow continuously from raw materials to finished goods in dedicated production cells. Only after specifying value and mapping the stream can lean thinkers implement the third principle of making the remaining, value-creating steps flow. Such a shift often requires a fundamental shift in thinking for everyone involved, as functions and departments that once served as the categories for organizing work must give way to specific products; and a "batch and queue" production mentality must get used to small lots produced in continuous flow.
Principle -04 Pull
Rather than building goods to stock, customer demand pulls finished goods through the system. Work is not performed unless the part is required downstream. As a result of the first three principles, lean enterprises can now make a revolutionary shift: instead of scheduling production to operate by a sales forecast, they can now simply make what the customer tells them to make. In other words, no one upstream function or department should produce a good or service until the customer downstream asks for it.
Principle -05 Perfection
As you eliminate waste from your processes and flow product continuously according to the demands of your customers, you will realize that there is no end to reducing time, cost, space, mistakes and effort. After having implemented the prior lean principles, it "dawns on those involved that there is no end to the process of reducing effort, time, space, cost, and mistakes while offering a product which is ever more nearly what the customer actually wants.
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