What is Lean?
Management guru Peter Drucker said, “There’s nothing so useless as doing efficiently that which should not be done at all.” Lean is an improvement and problem solving methodology that strives to reduce or eliminate activities that don’t add value to the customer.
Lean is founded on two pillars: respect for people and continuous improvement. According to Dr. Shigeo Shingo, a Toyota engineer and expert on the methodology, Lean is a never-ending elimination of waste; it is committed to total customer satisfaction, total commitment to quality and total employee involvement.
An industrial engineer at Toyota, Taiichi Ohno, first developed the Lean methodology in the 1950s, then known as the Toyota Production System. One of the system’s major innovations is that workers were seen as problem solvers who are trained and empowered to improve their processes and eliminate waste.
Since the 1950s, the Lean methodology has made great strides in improving business performance across both manufacturing and transactional environments.
Lean is much more than just a set of problem-solving tools.
The 5 Principles of Lean
Lean is much more than just a set of problem-solving tools. It was based on a foundation of principles designed to not only quantify and eliminate waste, but also help companies change the way they do business for the better. The following are five foundational principles of Lean and how they work together.
1. Value
Understanding what the customer is willing to pay for. Value is always defined by the customer and is categorized in three ways: non-value add activity (waste), value add activity, and business value add activity.
2. Value stream mapping
Mapping the process, steps, or sequence that a product or service goes through in a company.
3. Flow
Allowing product and information requests to flow smoothly through the business without delay or disruption.
4. Pull
Replacing only material that is used and eliminating excessive inventory, which allows us to respond quickly to customer requirements.
5. Strive for perfection
Always striving to eliminate waste and improve the value provided to customers.
Understanding Value
In Lean terms, value is always defined by the customer, and there are three ways to categorize value: 1) Non-value add activity, known as waste, or muda in Japanese. 2) Value-add activities, which are essential, and 3) business non-value add activities, which are things that must be completed but don’t add value to the customer, such as meeting regulatory requirements.
To help determine if a process is value-add, Lean experts have developed a simple flowchart of questions. If the answer to all three of these questions is “yes,” then the process or process steps are value-add.
- Is the customer willing to pay for the good or the service?
- Does the step transform the good or service?
- Is the action done for the first time, or is it done many times?
Eliminating Waste
A key tenet of Lean is the reduction of waste. Using the acronym TIMWOODS, here’s a look at the eight types of waste that can be eliminated by using Lean techniques.
Lean Six Sigma
While some companies deploy Lean solo, more often than not it is part of broader continuous improvement or performance excellence efforts that include Six Sigma, innovation, and other problem solving approaches.
Lean is often applied in conjunction with Six Sigma. Lean focuses on reducing waste so what is left is value-added. Six Sigma focuses on reducing variation and defects. Together, the two become a powerful combo to first lean out and then perfect your processes. In the last decade, companies have moved from treating Lean and Six Sigma as independent approaches to combining them into an improved operating system.
All of these continuous improvement efforts roll up into the organization’s strategic planning and execution, ensuring that everyone is working on improvements and innovations that align with the company’s strategic goals.
