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What is Lean Thinking?

Lean Thinking Origins

The ideas behind what is now termed lean thinking can be linked to several sources, including great industrialists like Henry Ford and management thinkers such as W. Edwards Deming.  Of particular note are the ideas originally developed in Toyota’s post Second World War manufacturing operations - known as the Toyota Production System – under the guidance of its chief engineer, Taiichi Ohno. These spread through its supply base in the 1970’s, and its distribution and sales operations in the 1980’s.

The term ‘lean’ was popularised in the seminal book ‘The Machine that Changed the World’ (Womack, Jones and Roos, 1990), which clearly illustrated - for the first time - the significant performance gap between the Japanese and western automotive industries.  It described the key elements accounting for this superior performance as lean production - ‘lean’ because Japanese business methods used less of everything - human effort, capital investment, facilities, inventories and time - in manufacturing, product development, parts supply and customer relations.

 

The Key Lean Thinking Principles

In ‘Lean Thinking’ (Womack and Jones, 1996) five lean principles were put forward as a framework to be used by an organisation to implement lean thinking. A key initial premise is to recognise that only a small fraction of the total time and effort when producing a product or delivering a service actually adds value for the end customer. It is therefore critical to clearly define value for a specific product or service from the end customer’s perspective, so that all the non value activities - or waste - can be targeted for removal step by step.

Womack and Jones’ five principles are:

  1. Specify what creates value from the customers perspective
  2. Identify all steps across the whole value stream
  3. Make those actions that create value flow
  4. Only make what is pulled by the customer just-in-time
  5. Strive for perfection by continually removing successive layers of waste

LERC research has suggested that, typically, for most manufacturing production operations only 5% of activities actually add value, 35% are necessary non-value adding activities and 60% add no value at all.  Eliminating the non value adding activities (or waste) is thus the greatest potential source of improvement in corporate performance and customer service.

Few products or services are provided by one organisation alone, so that waste removal has to be pursued throughout the whole ‘value stream’ - the entire set of activities across all the entities involved in jointly delivering the product or service. New relationships are required to eliminate inter-firm waste and to effectively manage the value stream as a whole. Instead of managing the workload through successive departments, processes are reorganised so that the product or design flows through all the value adding steps without interruption, using the toolbox of lean techniques to successively remove the obstacles to flow. Activities across each firm are synchronised by pulling the product or design from upstream steps, just when required, in time to meet the demand from the end customer.

Removing wasted time and effort represents the biggest opportunity for performance improvement and enabling a greater focus on creating value. Creating flow and pull starts with radically reorganising individual process steps, but the gains become truly significant as all the steps link together. As this happens, more and more layers of waste become visible and the process continues towards the theoretical end point of perfection, where every asset and every action adds value for the end customer. In this way, lean thinking represents a path of sustained performance improvement - and not a one off programme.

 

The Lean Enterprise - Lean Thinking

As lean thinking contends the organisation must view itself as just one part of an extended supply chain, it follows that it needs to think strategically beyond its own boundaries.  It also contends that because value streams flow across several departments and functions within an organisation, it needs to be organised around its key value streams. Stretching beyond the firm, some form of collective agreement or organisation is needed to manage the whole value stream for a product family, setting common improvement targets, rules for sharing the gains and effort and for designing waste out of future product generations. This collective group of organisations is called ‘the lean enterprise’.

Applying Lean Thinking in Different Sectors

Lean Thinking principles can be applied to any organisation in any sector.  Although lean’s origins are largely from an automotive manufacturing environment, the principles and techniques are being transferred to many sectors, often with little adaptation.  Sectors such as distribution, retailing, construction, healthcare, financial services, defence and public administration have all begun to implement lean ideas in recent years.

Implementing Lean Thinking  - The Tools and Techniques

Many tools and techniques are available to support the lean philosophy and to enable organisations to apply the ideas and implement change.  These emanate from several schools of thought (such as the quality movement) and many emerged from the Toyota Production System, while others have since been developed by research organisations such as LERC.  Consequently, there now exists an extensive toolkit to help the lean practitioner. Examples include 5S (five terms beginning with the letter ‘S’ utilised to create a workplace suited for visual control and lean production), Kaizen (a process function to plan and support concentrated bursts of breakthrough activities), Value Stream Mapping, and Policy Deployment (a visual management tool that allows management to select the most important objectives and to translate these into specific projects that are deployed down to the implementation level).

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