Concept of Lean Thinking
Lean Thinking originated from manufacturing methods used by Japanese automotive manufacturers, especially from Toyota. Lean thinking is basically about getting the right things, to the right place, at the right time, in the right quantity while minimizing waste and waiting time and being flexible and open to change.
A term coined by James P. Womack and Daniel T. Jones in their book “Lean Thinking: Banish Waste and Create Wealth in Your Corporation” to describe an exceptionally focused, efficient, agile and successful organisation. Lean thinking provides a way to specify value, sequence value-creating actions in the best way, conduct these activities without interruption whenever someone requests them, and perform them more and more effectively. Lean thinking means doing more and more with less and less resources while providing customers with exactly what they want.
“Becoming ‘lean’ is a process of eliminating waste with the goal of creating value.”
The lean way is about banishing waste or muda which is the Japanese word for waste. Muda is the centre of the lean thinking. Waste is any human activity that allocates resources but generates no value. For example, production of products that are not in demand, processing activities that are not needed and unnecessary transportation of goods. In order to become a lean organization, it is fundamentally important to eliminate and to avoid all following types of waste.
- Mistakes which require rectification,
- Production of items no one wants,
- Processing steps which aren’t actually needed,
- Movement of employees and transport of goods from one place to another without any purpose,
- Groups of people remaining idle because an upstream activity has not delivered on time,
- Goods and services which don’t meet the needs of the customer.
Eliminating waste along the entire value stream, instead of at isolated points, creates processes that need less human effort, less space, less capital, and less time to make products and services at far less costs and with much fewer defects, compared with traditional business systems. Companies are able to respond to changing customer desires with high variety, high quality, low cost, and with very fast throughput times. Also, information management becomes much simpler and more accurate.
The Five Principles of Lean Thinking
When Jones and Womack analysed what leading companies were doing to manage their business successfully over long periods of time, they distilled what they saw into a series of Lean Principles. Lean principles are fundamentally customer value driven, which makes them appropriate for many manufacturing and distribution situations. These were the five critical strategies that companies like Toyota used to design and manage their business.
“Lean thinking can be summarized in five principles: precisely specify value by specific product, identify the value stream for each product, make value flow without interruptions, let the customer pull value from the producer, and pursue perfection” – Womack and Jones.
- Value: Specify what creates value from the customers perspective. This must be defined by the end consumer, typically in terms of the requirements of a service, product or experience, a channel or method of delivery, a schedule or an ideal lead time, a price and the benefits the consumer expects to achieve. By clearly defining value for a specific product or service from the customers perspective, all the non value activities – or waste – can be targeted for removal.
- The Value Stream: Identify all steps across the whole value stream. The value stream is the entire flow of a product’s life-cycle from the origin of the raw materials used to make the product through to the customer’s cost of using and ultimately disposing of the product. The value stream can include the complete supply chain.
- Flow: Make those actions that create value flow. One very significant key to the elimination of waste is flow. If the value chain stops moving forward for any reason, then waste will be occurring. Eliminating this waste ensures that your product or service “flows” to the customer without any interruption, detour or waiting.
- Pull: Only make what is pulled by the customer just-in-time i.e. the actual customer demand that drives the supply chain. To achieve this requires great flexibility and very short cycle times of design, production, and delivery of the products and services.
- Perfection: Strive for perfection by continually removing successive layers of waste. The process continues towards the theoretical end point of perfection, where every asset and every action adds value for the end customer. This relentless pursuit of the perfection is key attitude of an organization that is “going for lean”.
Lean thinking also improves job satisfaction by providing immediate feedback to employees on their efforts to convert muda into value. Unlike process re-engineering, it provides a way to create new work rather than simply downsize in the name of efficiency.
“At the strategic level, lean has a more comprehensive and wider content. It is viewed not as a tool but a way of thinking, going beyond the pursuit of production excellence and emphasizing customer value and the entire system flow. Focusing solely on manufacturing efficiency is not enough to create long-term success for a business, therefore the objective is to build not just a “lean organization” but also “lean solutions” to achieve long-term success” -Womack and Jones.
To conclude, Lean Thinking involves a constant cycle of seeking perfection by eliminating waste and maximizing product value. Lean is principally associated with manufacturing industries but can be equally applicable to both service and administration processes. Also, the implementation of Lean thinking results in a departure from batch scheduling and a movement to continuous flow of single units of product.