What is Lean Management?

Introduction to Lean

Many companies we see today have been around for quite some time. Five and ten or more years ago, when the companies were founded, they implemented a project management system. It worked for them then, and generally, still works now. So they keep working the same way for years, and decades, without change simply because that’s the way they do things. And because they are following the “don’t fix it, if it ain’t broken” principle.

The problem with this approach is that the business world today is not only different from what it was a decade ago, but it’s constantly evolving and changing. The continual advancements in technology are transforming the market. And with it, the way we do business.  Competition is getting fiercer by the minute. In order to remain competitive, companies have to look for ways to improve speed of delivery and quality of work, and at the same time, reduce waste.

Many companies attempt to achieve better results and work more efficiently. They are choosing to implement a methodology that has proven to be very successful at increasing the organization’s productivity and reducing waste – Lean. Thirty and more years ago Lean was only a manufacturing technique. In recent years it has proven to be useful and applicable approach to project management in almost any industry.

What is Lean Management?

Lean management is an approach to running a company that helps businesses achieve their goals in a healthier, smarter and more sustainable way. At its core, it is a business methodology. It supports adding customer-defined value to products and/or services and reducing waste. It relies on two main pillars: continuous improvement and respect for people.

Lean management uses tools and methods for eliminating factors that waste time, effort and money. This is done first, by analyzing the business process. Then, making adjustments to certain steps or eliminating them if they don’t create value. That ensures the process is delivering value to customers through every step, and is cost-effective from start to end.

The main purpose of Lean management is creating value to the customer by optimizing resources. It is the ongoing effort to optimize the value stream. And improve products/services and processes, improve speed, quality and organizational health by making incremental improvements and eliminating waste.

Companies that wish to be Lean need to understand its principles and use them as guides for building a stable organization that constantly evolves. And at the same time actively works on identifying actual problems and removing them.

Brief History of Lean

The Lean methodology is not a new concept. Its application to modern business is constantly evolving and proving its timeless value. Before Lean was adapted as a project management approach, it was known as a manufacturing technique.

The Lean technique originates with the Toyota Production System (TPS) as an approach to manufacturing that refined the concept of Just-in-Time (JIT). In the 1950s, the Toyota engineer Taiichi Ohno set the foundation of TPS by combining JIT with Jidoka, Kaizen and pull production. The goal was to additionally increase production speed and improve quality. And most importantly, to eliminate waste.

Few decades later, in the 1980s, Western manufacturers struggled to keep up with the more efficient Japanese companies. They had two options: change the way they work or shut down. Those who decided to survive the crises began adopting the practices of the Japanese companies and emulating TPS. They were calling it World Class Manufacturing, Stockless Production, and Continuous Flow Manufacturing.

But Lean manufacturing, as a management philosophy, was first introduced in an articles titled “Triumph of the Lean Production System”, written by John Krafcik in 1988. Later, in 1990, three scholars, Womack, Jones and Roos, released a couple of books “The Machine that Changed the World” and “Lean Thinking”, which played a huge role in spreading the concepts and explaining the principles of Lean manufacturing in the West.

Principles of Lean Management

The Lean methodology relies on five Lean principles. They each build on each other, then begin start the circle again to create a continuous loop of improvement. The 5 main Lean thinking principles are: value, value stream, flow, pull, and perfection.

#1 Identify Value

What’s the goal of every business? To offer a product or services that customers want and are willing to pay for. To do this, a company need to learn what customers need (or want). This customers’ need is the ‘secret ingredient’ the company needs to add to their product/service to make it valuable.

The value of a product or service you are offering lies in the ability of that product to solve a problem for the customer. More precisely, in the part of product that solves the customers’ pain points. Anything else, that doesn’t bring value to the end product is considered waste.

Identifying what the customers consider valuable is the first step.

#2 Map the Value Stream

After company determine the unique value, they need to map and evaluate the process that leads towards delivering that value. Mapping the workflow has to include every step and all the people involved. That way, they can understand the whole process and see how value moves through the organization. And more importantly, in what proportion different parts of the process do or do not create value.

Having a clear map of your value stream will make it a much easier to see which teams are responsible for which tasks, who is responsible for measuring, evaluating and improving the process. Additionally, it help detect where value gets stuck, or which steps don’t bring value at all, so you can improve or eliminate them.

#3 Create Flow

Once the company maps and polishes the value stream, it needs to make sure the workflow of each team runs smoothly. This is ongoing work because developing a product/service requires having teams from different areas to work together in sync. And often, there will be bottlenecks and obstacles that slow down or stop the process.

One thing you can do to ease the process is break down work into small chunks, so work will flow faster through the system. Moreover, if the value stream is mapped correctly, you can easily detect and remove process roadblocks. And make the necessary adjustments to the flow.

#4 Establish Pull

Companies that have a stable workflow are able to deliver work tasks faster and with less effort. But to ensure the stability of the workflow, companies need to establish a pull system. When the organization works using a pull system, new work items will are taken into the flow only when there is actual demand for it.

A pull system lets companies optimize resources’ use and capacity. Aand deliver products/services only when there is actual demand. As a results, teams work as much as they can, best they can, and deliver value with every tasks they complete.

#5 Continuous Improvement

Going through the previous steps (principles) means going through the basic steps of establishing a Lean management system. But, the last principle is probably the most important one, so don’t forget it. Businesses are pretty much like any other living being. They exist among other [business] and have to change and adapt to survive. Ccontinuously questioning their process and striving to improve it are key. And it’s very important that all employees, on all levels are involved and support this principle.

There are numerous techniques to encourage continuous improvement. Some of them are:

• encouraging team members to share their ideas during daily meetings,
• allowing them to take action and adjust the way they perform their own work,
• identifying areas of improvement and taking action.

This way, you can ensure your company stays Lean and is continually delivering value.

Pillars of Lean Management

The Lean methodology relies heavily on two primary concepts. Continuous improvement and respect for people. These two pillars guide the whole practice of Lean. The businesses that want to use Lean but don’t respect the main pillars cannot apply the methodology properly nor get all the benefits of Lean management.

Continuous Improvement

Many people believe that Lean is equal to elimination of waste. While Lean strives to eliminate waste from organizations, that is only in service of the main goal – creating value.  But how can an organization create value constantly? By learning. Learning what the customers want and need. Then, adjusting the value stream. Replacing the steps that don’t create value (the waste), with ones that will add more value for the customer.

But in order to deliver value, companies need to be able to quickly learn what’s valuable. So they need to deliver fast, and get customer feedback even faster. And using that information, learn which parts of the product and process they can improve to deliver (more) value and eliminate waste.

This seemingly simple cycle helps Lean organizations stay competitive and differentiate themselves from the competition. They have to be nimble and methodical. And encourage employees to foster a learning mindset paired with the need to question and test their ideas and results. That way, everyone will support the continuous improvement cycle and further develop the process in their respective area of expertise.

Respect for People

In most organizations though, the decisions come from the top, and are communicated to all organization levels. While managers focus on the big picture, but the front line workers have their hands on the product/service. They see all its strengths and weaknesses up close. So it’s no wonder that often the best ideas come from them.

Lean thinking   acknowledges that all employees are important. And understands the value of the insights that comes from front line workers. Thus, encourages everyone to have an equal voice.

That leads us to the Lean concept “gemba”.  Gemba allows organizations to find the best ideas and realize them. Gemba means gathering ideas for improving work and creating value from the main source – the place where work is done. This is based on the assumption that people want to do their work best they can and deliver the most value to the customers. So they are motivated to make decisions and adjustments that optimize their time and resources. Therefore, they work smarter, not harder. And deliver more value.

But respecting workers and allowing them to openly voice their ideas and concerns has additional benefits. It creates the sense of lightweight leadership. And in combination with the concept of continuous improvement, gives employees the opportunity to master their craft. And instills them a sense of purpose to understand and increase the value of their work.

Since Lean respects people, the role of leaders in Lean is slightly different too. Lena leaders define the goal, but encourage the employees to understand what they need to do, and find the most appropriate course of action towards the goal themselves. They are responsible for bringing out the best out of their employees, and removing the obstacles that prevent the team from delivering value.

Why Implement Lean?

Avoiding waste has a long history in manufacturing. But lately, the need to do more with less exists in almost all businesses. Many companies are struggling to find ways to be more competitive. And every new product idea must provide a solid business value, otherwise management won’t allow that project to even begin. In most cases, the fate of a project rests upon costs versus market value, leading to many ideas being discarded before they are actually developed.

Lean management is focused on adding value to a product/service while eliminating waste, and can be the key to turning cost-intensive solutions into profitable products. When implemented and practiced properly, Lean enables companies to be more adaptable to market changes. Through implementation of Lean management, companies will benefit from establishing streamlined processes, reduced waste, and lower operational costs. In addition, they will create a continuous improvement culture. And in doing so, assure the company’s long-term survival in today’s fast paced economy.