Lean Management definition
Lean management is an approach to running an organisation that supports the concept of continuous improvement. It is a long-term approach to work that strives to enhance the quality and efficiency of products, processes or services by making small, incremental changes over time.
The approach employs strategies for eliminating factors that have detrimental effects on how organisations spends their time, effort or money. This is achieved by examining a business process and adapting it or cutting out steps that do not maximise value.
Also known as ‘lean enterprise’ or ‘lean thinking’, lean management is the philosophy behind the continuous improvement structure established by Toyota, one of the most successful automotive manufacturers, ever.
A fundamental part of lean management is that the organisation must strive for ‘flow’, so all processes can be carried out without any interruption. The approach has now become a universal management tool that is instrumental in maintaining value and optimising processes.
What is Lean Management in Business?
Lean management encourages shared leadership and shared responsibility rather than management keeping control over all work processes. Therefore, the two central ideas of the lean methodology are continuous improvements and respect for people.
What Companies Use Lean Management?
The Lean Management concept is widely accepted in a range of industries. However, the approach originated from the Toyota Production System that was founded roughly 70 years ago. Back in the 1940s, Toyota built the lean manufacturing concept, where it strived to reduce processes that didn’t add value, in order to minimise waste.
This resulted in Toyota achieving vast improvements in efficiency, productivity, cost efficiency and cycle time (when a task enters the ‘in progress’ stage and someone is working on it).
Two big companies that use lean management are Nike and FedEx Express. Nike utilised lean management to standardise performance across factories and reduce its carbon footprint while increasing production. FedEx Express, however, identified specific milestones in its procedures which allowed it to increase productivity and decrease costs that emerge with unproductive, unnecessary processes.
The 5 Basic Lean Management Principles
- Identify Value
Every company strives to offer a product or service to a customer who is happy to pay money for it. In order to achieve this, a company must add value to its products, based on its customers’ needs. The value lies in what you are striving to achieve or solve for the customer - it is the solution that the customer must spend money on. Any other process that doesn’t actually bring value to the end product can be viewed as waste.
- Value Stream Mapping
This involves mapping the workflow of the company. Examine all the employees and the actions required to deliver the end product to the customer. This highlights which parts of the process are not valuable.
When the value stream is mapped, identifying which processes are undergone by which teams, and whose duty it is to measure, evaluate and improve these processes, will be much easier. Again, seeing the big picture will allow you to identify which steps don’t add any value, and they can then be eliminated.
- Create Continuous Workflow
After the value stream is mastered, it is important to ensure that the workflow of each team runs smoothly - this can take a while to figure out.
Interruptions and bottlenecks could arise at any moment. By dividing work into smaller groups and getting a clear picture of the workflow, detecting and removing interruptions, will be easier.
- Create a Pull System
Ensuring there is a stable workflow means that the workforce can carry out tasks with much less effort. Although, in order to maintain the stable workflow, a pull-system should be created. In this system, the work is only pulled if there is a demand for it. This ensures that resources are optimised and only products in demand are delivered.
- Continuous Improvement
The previous four steps should ensure that you have built a lean management system. However, this final step is just as, if not more, important. Even with this system in place, problems can arise at any moment, with any of the previous principles. Therefore, all employees should be continuously involved in improving the process. Having a daily meeting to discuss the principles and what needs to be done to avoid any impeding obstacles is one technique that can be implemented to promote continuous improvement.
Why is Lean Management Important?
The increasing popularity of the lean principles can be put down to the fact that they genuinely work to improve every aspect of a business process and can be applied to every level of an organisation’s hierarchy.
There are four major advantages that the management team can benefit from:
- Focus. By incorporating lean management, you can lessen wasteful activities so employees can concentrate on work activities that carry value.
- Improving productivity and efficiency. When the work force is focused on delivering value, they will consequently be more efficient and productive, as they will not have other unimportant, unclear tasks to distract them.
- Smarter process. By implementing a pull-system, employees will be able to deliver work in accordance to the actual demand.
- Improved use of resources. When production is in accordance with actual demand, the organisation will be able to use the appropriate amount of necessary resources.
Taking all these advantages into consideration, employees should be more flexible and able to respond to the needs of the consumer at a quicker rate.
To summarise, lean management is a guide for constructing an organised, constantly evolving system whereby real problems can be identified and removed. The main purpose of the approach is ensuring that customers are getting the best value by making the best use of resources, and that organisations have a stable workflow based on the customer demand. Continuous improvement is a major element of lean management, to make sure that the whole workforce is involved in the improvement process.