Lean or Lean management is a business approach for maximizing customer value while minimizing waste. It is based on the principles of the Toyota Production System (TPS) and aims to create a culture of continuous improvement in an organization.
The main goal of Lean management is to improve efficiency and effectiveness by reducing the time spent on non-value-adding activities and optimizing the flow of work.
The Lean concept can be successfully applied to any business or production process, from manufacturing to healthcare, engineering, and software development.
Lean is based on five (5) principles that govern its implementation and its application, the five principles of lean management include:
- Defining value
- Mapping the value stream
- Creating flow
- Using the pull system
- Pursuing perfection.
We will go through each of these and see how businesses can use lean management as an effective tool for recovery, especially now that different economies are trying to recover from the gross negative effects caused by the Covid-19 pandemic.
Organizations need to optimize activities which produce value, and element any waste so that they can give quality products and services to their customers. Lean management is all about creating value for the customer and reducing waste in the organization
DEFINING VALUE:
This involves the organization understanding what value means in the eyes of the customer, they need to get feedback from their customers about what adds value and what does not add value. For example; a consultancy firm that offers consultancy services needs to find out what the clients want, is it timeliness in execution of projects?, quality advice (data based)?
Value has been defined as anything that exceedingly brings satisfaction to a consumer of a product or services; value has also been defined as the ability for a product to satisfy the needs of the end user.
Organizations need to focus on the value adding process and qualities that the customers want, so that they do not waste money in making products that are not needed or coming up with innovations that have no value for the customers. This information can be got through interviews, requesting for feedback from clients on the services provided and on the products they consume. It is very important that organizations concentrate only on those items and innovations that add value.
With the scarcity of resources as companies recover from the effects of the pandemic, it is very important that companies concentrate on things that will add value to their customers and cut out any non-value adding processes or items on the products that they make.
MAPPING THE VALUE STREAM
The second principle of lean is mapping out value in the organization’s processes, insight of what has been defined as value from the customers’ view. The organization need to redesign their processes from the view point of the customer.
Two critical types of waste come out clearly at this stage; value adding and necessary, and non-value adding and un-necessary waste. At this stage companies need to totally eliminate the non-value adding and un-necessary waste in their processes or from the products they make, this will also help to reduce the un-necessary costs of production.
An example; after interviewing their customers, a brewing company finds out that 85% of respondents showed that they do not like the new brand of beer that is being produced, and from the market survey the company also further finds out that the sales for that particular brand are lower than the actual costs of production, it would be reasonable that this particular brand is removed from the production line, over the years we have seen numerous brands of beer dropped by different brewing companies.
It is imperative that companies use this similar approach to drop all non- value adding processes and items which are just waste and non-productive waste. In the next article we will give a detailed explanation and break down of the various wastes that the different organizations have and need to eliminate.
CREATE FLOW
After identifying the waste and eliminating it, the next process is to create systems, processes, and work flows to ensure that waste is not brought back into the production system or way of work. This can be through making SOPs that clearly define how a certain task should be accomplished, training staff and showing them where waste is and waste is, clear guidelines should be made to ensure that everyone in the organization knows what to do, how to do it and when to do it.
Creating flow goes a long way to ensuring that costs are controlled and quality is maintained. It is through this that controls are maintained at the work place and in organizations. Without controls in place, it is very likely that everyone will be doing whatever they want and this can be very costly to the organization in terms of costs, quality of products and organization brand.
ESTABILISH A PULL SYSTEM
Inventory is considered one of the biggest wastes in any production system. The goal of a pull-based system is to limit inventory and work in process (WIP) items while ensuring that the requisite materials and information are available for a smooth flow of work. In other words, a pull-based system allows for Just-in-time delivery.
Pull-based systems are always created from the needs of the end customers. By following the value stream and working backwards through the production system, you can ensure that the products/ services produced will be able to satisfy the needs of customers.
It is very important that businesses manage stock and WIP, they should only stock what has been ordered for, and establish channels through which stock can be quickly brought in, incase need arises. The cost of stocking and also keeping stock can be overwhelming on the business, and at this time when businesses are trying to recover from the shocks of the Covid-19 pandemic it is very important that such a waste is managed accordingly.
Service companies should also concentrate on works that have been ordered for, and give more time to work where the customers have made commitments in terms of payments, this will enable these organizations to minimize the risk of doing work for clients who do not pay for the work done. This can be done by developing working contracts and also including payment terms which implore clients to make certain percentage of the payment before the work can be started.
PURSUE PERFECTION
This last stage establishes a very important aspect of the business, which is for the business to thrive it must ensure that it pursues quality in everything it does, and it should also strive for continuous improvement. Continuous improvement entails continuous learning, continuous innovation and development, and it calls upon all the members of the company to be part of the continuous improvement program.
It is very important that companies keep pursuing perfection and continuous improvement so that they keep looking for cost effective ways of doing business.