In today’s market, Organisations are continuously improving by competing with themselves, with their product or service delivery time to the customer. Real-life examples like Amazon.com has considerably reduced the delivery time, delays, return time & incorrect orders each year. These positive changes have happed due to a cultural mindset change within the organisation that priorities delivering value with a process having minimal waste. This mindset is called Lean thinking.
What is Lean Thinking
Lean thinking is a mindset to find new ways of activities to maximize the value of deliverables while minimizing waste. Anything that matters to the customer is considered as value whereas any activity which does not add value to the deliverables is considered as waste. Lean focuses on creating more value for the customers by optimising resources and reducing waste. Lean focuses on the process of a product or service rather than the people involved in it. Lean uses continuous improvement as an effort to implement incremental changes to perfect the process rather than a complete one-time overhaul of the process. It helps to reduce operating costs, improve efficiency, productivity & quality. Lean is a philosophy and not merely a set of tools.
It was James P Womack & Daniel T Jones who coined the term “Lean”. Both coined the term inspired by their in-depth study of the Toyota production system. Toyota production system (TPS) is the system used by Toyota Motor Corporation to produce their world-class automotive products. TPS is known for its effectiveness in producing products quickly and efficiently with minimal waste. Lean was also used by the ford motor company for over a century.
5 Lean Principles
A framework was created so that any organisation can implement Lean by following the framework. As an outline of framework James P Womack & Daniel T Jones developed five key principles to implement Lean in any environment. These five key principles are:
- Define value
- Map value stream
- Create flow
- Establish pull
- Pursue perfection
Define Value
Identifying what the customer wants from the process should be properly defined. Identifying the value from a customer point of view is defined in order to begin the improvement process. If an organisation fails to identify what customer wants will ultimately create a process that not only fails to deliver value but also consumes the resources within the organisation which is a waste.
To Define what customers want from a product or service, organisations must understand what customers, how it should be delivered and the price customers are willing to pay for it, organisations must list from the customers. Engaging with customers to understand their needs, expectations is necessary to properly define the Values that customer wants or expects from the organisation.
Map Value Stream
Each process consists of a flow of activities that finally provides a product or service to the end customer. Any activity which does not add value to this process is considered waste. Anything that matters to the customer is considered as value. Value stream mapping helps identify this waste and eliminate it from the process.
Value stream mapping represents a flow chart with every activity or step in the proper sequence involved in the process. A team is created within the organisation to identify each activity involved in the process, input and output of the process are also identified. The team involves all cross-functional departments which takes part in the process. To create a flow chart commonly used graphical representations or icons are used to represent man, material & information.
In most organisations, only 5% of activities add value to a process while 95% does not add value to a process. Activities which does not add value is a waste but still consume the resources of the organisation. The management of an organisation can feel the waste before it is seen.
To begin identifying the wastes in the process team should identify and create the current state of the flow of activities in the process. The team should identify the activities or steps which add value to the process which have the following criteria:
- The activity should affect or matter to the customer.
- The activity should add changes to the product or service from the previous step or activity.
- The activity should be done right the first time itself.
Activities that are in line with these criteria are considered to add value to the process rest are considered waste and eliminated from the process. After eliminating the wasteful activities or steps, the flow chart is recreated again with value-added activities. It is important to know that eliminating wasteful activities is not eliminating jobs or demoralising or devaluing people involved in the activity. Human resources exempted during the value stream mapping can be reassigned to other processes to add value.
Create Flow
The value-adding activities or steps are made sure to perform smoothly during the operation of the process. Each activity in the process should not create any delays or interruptions in the process which adversely affect the customer. Activities that take more time than it’s proposed cycle time are considered delays. Activities or steps causing delays or interruptions are identified and studied for the root cause of the delay. Solutions are provided to rectify the problems within the activities for the smooth flow of the activities in the process.
Establish Pull
To further eliminate unnecessary waste, the process is made sure to be initiated only if there is a demand for it. Establishing pull will avoid unnecessary consumption of the resources for creating outputs. The pull makes sure the successive activity is ready to accept the work from the preceding activity instead of pushing the work. Pushing the work will result only in overloading the activity. Establishing pull make sure the process is efficient and the process is not initiated if there is no demand for it.
Pursue Perfection
Pursuing perfection is continuous improvement of the process until a state of perfection is reached. Continuous improvement involves iterating the process for eliminating wasteful activities and increasing the value involved in the process. It is not possible to eliminate waste from a process in the first iteration itself, so multiple iterations are required. The continuous improvement follows the idea of achieving a state of perfection in small increments instead of a single big step.
Conclusion
Lean thinking with the right cultural mindset can optimise the operations involved in an organisation resulting in customer satisfaction. Lean will make the operational process simple, visible and more predictable. Lean requires the right cultural mindset because it involves management asking questions to employees to get answers regarding issues in the process instead of management giving one-way instructions found in the traditional management. Any organisation which focuses to deliver value to its customers with the optimal resources should implement Lean thinking and its principles.