Lean management is an approach to managing an organization that supports the concept of continuous improvement, a long-term approach to work that systematically seeks to achieve small, incremental changes in processes in order to improve efficiency and quality.
The primary purpose of lean management is to produce value for the customer through the optimization of resources and create a steady workflow based on real customer demands. It seeks to eliminate any waste of time, effort or money by identifying each step in a business process and then revising or cutting out steps that do not create value. The philosophy has its roots in manufacturing.
Lean management focuses on:
- Defining value from the standpoint of the end customer.
- Eliminating all waste in the business processes.
- Continuously improving all work processes, purposes and people.
Lean management facilitates shared leadership and responsibility; continuous improvement ensures that every employee contributes to the improvement process. The management method acts as a guide to building a successful and solid organization that is constantly progressing, identifying real problems and resolving them.
Lean management is based on the Toyota production system which was established in the late 1940s. Toyota put into practice the five principles of lean management with the goal being to decrease the amount of processes that were not producing value; this became known as the Toyota Way. By implementing the five principles, they found that significant improvements were made in efficiency, productivity, cost efficiency and cycle time.
5 principles of lean management
Lean management incorporates five guiding principles that are used by managers within an organization as the guidelines to the lean methodology. The five principles are:
- Identify value
- Value stream mapping
- Create a continuous workflow
- Establish a pull system
- Facilitate continuous improvement
Identifying value, the first step in lean management, means finding the problem that the customer needs solved and making the product the solution. Specifically, the product must be the part of the solution that the customer will readily pay for. Any process or activity that does not add value -- meaning it does not add usefulness, importance or worth -- to the final product is considered waste and should be eliminated.
Value stream mapping refers to the process of mapping out the company's workflow, including all actions and people who contribute to the process of creating and delivering the end product to the consumer. Value stream mapping helps managers visualize which processes are led by what teams and identify the people responsible for measuring, evaluating and improving the process. This visualization helps managers determine which parts of the system do not bring value to the workflow.
Creating a continuous workflow means ensuring each team's workflow progresses smoothly and preventing any interruptions or bottlenecks that may occur with cross-functional teamwork. Kanban, a lean management technique that utilizes a visual cue to trigger action, is used to enable easy communication between teams so they can address what needs to be done and when it needs to be done by. Breaking the total work process into a collection of smaller parts and visualizing the workflow in this regard facilitates the feasible removal of process interruptions and roadblocks.
Developing a pull system ensures that the continuous workflow remains stable and guarantees that the teams deliver work assignments faster and with less effort. A pull system is a specific lean technique that decreases the waste of any production process. It ensure that new work is only started if there is a demand for it, thus providing the advantage of minimizing overhead and optimizing storage costs.
These four principles build the lean management system. However, the last principle -- continuous improvement -- is the most important step in the lean management method.
Facilitating continuous improvement refers to a variety of techniques that are used to identify what an organization has done, what it needs to do, any possible obstacles that may arise and how all members of the organization can make their work processes better. The lean management system is neither isolated nor unchanging and, therefore, issues may occur within any of the other four steps. Ensuring all employees contribute to the continuous improvement of the workflow protects the organization whenever problems emerge.
Examples of lean management
The lean management principles can be used as a universal management tool to improve companies' overall performance.
Some examples of specific business and production processes that are based on the lean management concept include:
Benefits of lean management
Lean management benefits organizations by focusing on improving all parts of the work process throughout every level of the company's hierarchy. Specifically, managers benefit from advantages such as:
- A more intelligent business process - The pull system ensures work is only carried out when there is an actual demand and need for it.
- Improved use of resources - The pull system also ensures the organization is only using resources when they are needed since it operates based on real customer demand.
- Improved focus - Lean management decreases the amount of wasteful activities, therefore allowing the workforce to increase their focus on tasks that produce value.
- Enhanced productivity and efficiency - Improved focus leads to a more productive and efficient workforce since attention is not given to unnecessary activities.
These major benefits work together to create a company that is more flexible and has the ability to address customer requirements in an improved and faster manner. Overall, the lean management system creates a solid production system that has a higher chance of improving a company's total performance.