What is Lean management?
Lean management is an approach to managing an organization that supports the concept of continuous improvement, a long-term approach to work that systematically seeks to achieve small, incremental changes in processes to improve efficiency and quality.
The primary purpose of Lean management is to produce value for the customer by optimizing resources and creating a steady workflow based on real customer demands. It seeks to eliminate any waste of time, effort or money by identifying each step in a business process and then revising or cutting out steps that do not create value. The philosophy has its roots in manufacturing.
Lean management focuses on the following:
- Defining value from the standpoint of the end customer.
- Eliminating all waste in the business processes.
- Continuously improving all work processes, purposes and people.
Lean management facilitates shared leadership and responsibility; continuous improvement makes sure that every employee contributes to the improvement process. The management method acts as a guide to building a successful and solid organization that is constantly progressing, identifying real problems and resolving them.
Lean management is based on the Toyota production system, which was established in the late 1940s. Toyota put into practice the five principles of Lean management with the goal being to decrease the amount of processes that were not producing value; this became known as the Toyota Way. By implementing the five principles, Toyota found that significant improvements were made in efficiency, productivity, cost efficiency and cycle time.
5 principles of Lean management
Lean management incorporates five principles that managers within an organization use as the guidelines to the Lean methodology. The five principles are as follows:
1. Identify value
The first step is finding the problem that the customer needs solved and making the product the solution. Specifically, the product must be the part of the solution that the customer will readily pay for. Any process or activity that does not add value -- meaning that it does not add usefulness, importance or worth -- to the final product is considered waste and should be eliminated.
2. Incorporate value stream mapping
The process of mapping out the company's workflow, including all actions and people who contribute to the process of creating and delivering the end product to the consumer, is called value stream mapping. This step helps managers visualize which processes are led by what teams and identify the people responsible for measuring, evaluating and improving the processes. This visualization helps managers determine which parts of the system do not bring value to the workflow.
3. Create a continuous workflow
A continuous workflow is when each team's workflow progresses smoothly, and any interruptions or bottlenecks that might occur with cross-functional teamwork are prevented. Kanban, a Lean management technique that uses a visual cue to trigger action, allows easy communication between teams so that they can address what needs to be done and by when. Breaking the total work process into a collection of smaller parts and visualizing the workflow facilitates removing process interruptions and roadblocks.
4. Develop a pull system
A pull system makes sure that the continuous workflow remains stable and guarantees that the teams deliver work assignments faster and with less effort. A pull system is a specific Lean technique that decreases the waste of any production process. It makes sure that new work is only started if there is a demand for it, thus providing the advantage of minimizing overhead and optimizing storage costs.
5. Facilitate continuous improvement
The last principle -- continuous improvement -- is the most important step in the Lean management method. Facilitating continuous improvement refers to using a variety of techniques to identify what an organization has done, what it needs to do, any possible obstacles that might arise and how all members of the organization can make their work processes better. The Lean management system is neither isolated nor unchanging, and therefore, issues might occur within any of the other four steps. Making sure that all employees contribute to the continuous improvement of the workflow protects the organization whenever problems emerge.
Examples of Lean management
The Lean management principles can be used as a universal management tool to improve companies' overall performance. Some examples of specific business and production processes that are based on the Lean management concept include the following:
Benefits of Lean management
Lean management benefits organizations by focusing on improving all parts of the work process throughout every level of the company's hierarchy. Specifically, managers benefit from advantages such as the following:
- A more intelligent business process. The pull system makes sure that work is only carried out when there is an actual demand and need for it.
- Improved use of resources. The pull system also makes sure that the organization is only using resources when they are needed since it operates based on real customer demand.
- Improved focus. Lean management decreases the number of wasteful activities, therefore allowing the workforce to increase its focus on tasks that produce value.
- Enhanced productivity and efficiency. Improved focus leads to a more productive and efficient workforce since attention is not given to unnecessary activities.
These major benefits work together to create a company that is more flexible and can address customer requirements in an improved and faster manner. Overall, the Lean management system creates a solid production system that has a higher chance of improving a company's total performance.
