Lean is one of those management buzzwords that many people like to use but few really understand beyond the basic common sense concept of becoming more efficient by removing waste in all its dastardly forms. Therefore, if you’re interested in learning about Lean as an approach to efficiency either to use in your life as a graduate consultant or perhaps keen to impress during an interview, then read this article. Otherwise go do something else, fatty.
What is Lean?
Lean is about removing waste and increasing value.
Waste is any human activity which absorbs resources but creates no value.
There are typically 7 types of waste:
- Defects – making something with errors which requires rectification
- Overproduction – making things which no one wants
- Unnecessary processing steps – doing things which don’t add value
- Movement of employees – staff having to travel around
- Transport of goods – moving something from one place to another without purpose
- Waiting – people waiting for something to be done before they can act
- Pointlessness – providing something which doesn’t fulfil customer needs
The japanese word for waste is muda.
Lean thinking seeks to address waste by applying 5 key principles. These are explained below, but before diving in, a word about something called the Lean Enterprise. (Jean luc Pacard is not at the helm)
The thing that sets Lean apart from general process mapping and business process re-engineering is that it seeks to focus on the product and everything that goes in to making the product (or delivering the service). Therefore, it goes beyond departments and individual companies becuase in today’s world, the value stream is fragmented, different companies are involved in one product; you rarely find one company doing everything from raw material to finished product delivered to your door. So, after getting the overview of Lean by reading about the 5 key principles, it’s worth doing a bit more reading to really get to grips with the idea of the Lean Enterprise.
Without further ado, I give to you, the 5 tenets of Lean:
- Specify value
- Identify the value stream
- Flow
- Pull
- Perfection
1. Specify value
Understand what the customer really wants. Value in business starts and ends with the customer. Take this article for example, who is the customer? You, the reader. So what do you want? An easy to read informative article that keeps you, the ‘customer’, engaged. I don’t want War and Peace, nor do I want a haiku in Italian. I could become super efficient at churning out haiku’s in Italian, but my ‘customers’ don’t want that. Find out what’s truly valued then work at producing it in the most efficient way possible.
2. Identify the value stream
Now that I know what value is: an easy to read informative article that keeps the ‘customer’ engaged, I need to identify all the activities involved in producing this product.
Activities in the value stream fall into 1 of 3 categories:
- Stuff i do which adds or creates value
- Stuff i do which adds no value
- Stuff i do which needs to be done but doesn’t add value, i.e. because of regulation such as reporting your activities to a regulator
Once I do this, I can then begin to realise some efficiencies. Annihilate type 2 activities immediately, think about improving type 3 activties and work your proverbials off to focus on type 1 activities.
3. Flow
Step 3 is now all about arranging those activities identified from step 2 into the best sequence possible. Think about when you’re ‘in the zone’ and time slows down and everything works perfectly, words are flowing onto the page with ease while you write your best essay, you’re solving puzzles, you’re potting pool balls with ease, you’re owning a video game, you’re just invincible. This is flow.
Both quitting and winning are undesirable outcomes when you’re in this state because you’re enjoying the act of productivity. You’re operating at the edge of your limits. Anything that disrupts this flow is bad. It could be a phone call or a fire alarm which jolts you out of your heightened state of concentration.
Translate this into the world of business. You want to have this product produced with minimal disruption which might come from waiting time or a defect you need to correct. In the example of writing this article, as in the value stream map, I’ve re-configured the steps so that I move straight into writing the article after planning and do this in the same location. Thereby cutting out the ‘travel time’ wastage and encouraging flow.
Arrange your value stream activities in a way that encourages the optimum flow right from the very beginnings of a product to the final piece delivered to the customer.
4. Pull
Once your value adding activities are lined up in the best sequence, you now need to think about putting in place mechanisms which allow a customer to ‘pull’ a product from you. A customer should order something, which then triggers the series of activities which lead to the production of the product and its eventual delivery. All action should be ‘pulled’ by the customer.
(Get your coat luv….)
A great example of pull is Dell’s machine ordering system: you log on, you make your PC or laptop which then triggers the assembly, which requires part A, which needs to be shipped from location B, which is bought from company C. If the customer doesn’t order the PC, company B don’t buy the part from company C. Simple.
5. Perfection
So now you have a very efficient, lean organisation. Activities are visible and it’s clear what you do to make something. Now everyone is empowered to improve the way they work with knowledge of the end-to-end process. The removal of waste should be ruthless and unceasing.
Benefits
- less inventory/ stock which means less floorspace and therefore reduced storage/ property costs
- Fewer defects because products are made in flow
- Less rework because products are made right first time
- Quicker lead times, i.e. the time between a customer ordering something and getting something is reduced
Background (if you’re interested)
Lean was conceived by a bunch of people working at Toyota in Japan after world war II. At this time, the prevailing thinking was to achieve efficiency through mass production by automating large machines to produce lots of parts which are then assembled and delivered to the customer. This was the batch and queue system, where one part was produced in a batch and stored until it was needed. The machine would then be changed over to produce another batch of parts which in turn was stored until needed. This was thought to be fine because machines were unwieldy and people thought it would take too long to keep changing a machine to produce different parts. Efficiency was then all about developing machines to produce as many parts as possible as quickly as possible. But this leads to many of the 7 inefficiencies mentioned above.
Get Leaner – further reading
Ok, so you now know more about Lean than you did 10mins ago. If you’d like to get to grips with Lean even more and have slightly longer than 10mins, I would recommend the following:












