What is Lean Management?

Lean management has become a universal management tool for delivering value and optimizing work processes. Learn more about Lean management and its benefits.

Introduction

You have probably heard of the Lean management concept and its growing popularity in the business world. But don’t worry if you didn’t. In the next few paragraphs, you will get familiar with Lean.

Actually, there is no surprise that Lean management is now widespread across industries. Thanks to its core values and positive impact on companies’ overall performance, the Lean concept appears to be a universal management tool.

You can apply the concept of Lean in any business or production process, from manufacturing to marketing and software development.

Lean management relies on 3 very simple ideas: deliver value from your customer’s perspective, eliminate waste (things that don’t bring value to the end product) and continuous improvement.

So now when you know the core idea, let’s dig deeper and get to know the basic principles of Lean management and where it comes from.

What is Lean Management and How Did It Start?

Before you start with the basic principles, you need to realize that Lean management is about continuously improving work processes, purposes, and people.

Instead of trying to hold total control of work processes and keep the spotlight, Lean management encourages shared responsibility and shared leadership.

After all, a good idea or initiative can be born at any level of the hierarchy and Lean trusts the people who are doing the job to say how it should be done.

Currently, Lean management is a concept that is widely adopted across various industries. However, it has actually derived from the Toyota Production System, established around 70 years ago.

Back in late 1940’s, when Toyota put the foundations of Lean manufacturing, they aimed to reduce processes that don’t bring value to the end product.

By doing so, they succeeded to achieve significant improvements in productivity, efficiency, cycle time and cost efficiency.

Thanks to this notable impact the Lean thinking has spread across many industries and evolved to 5 basic principles of Lean management as described by the Lean Management Institute.

Do not make mistake, Lean management was not created in a moment. It was and still is evolving gradually, thanks to many observations and the desire of people for continuous improvement.

So, let’s get to the basic principles of Lean management.

5 Basic Lean Management Principles

  1. Identify Value

  2. What does every company strive to do? To offer a product/service that a customer is ready to pay for. To do so, a company needs to add value defined by its customers’ needs.

    The value lies in the problem you are trying to solve for the customer. More specifically in the part of the solution that your customer is actively willing to pay. Any other activity or process that doesn’t bring value to the end product is considered waste.

    So you first need to identify the value that you want to deliver and then proceed to the next step.

  3. Value Stream Mapping

  4. This is the point where you literally need to map the workflow of your company. It has to include all actions and people involved in the process of delivering the end product to the customer. By doing so, you will be able to identify what parts of the process bring no value.

    The value stream mapping will show where value is being generated and in what proportion different parts of the process do or do not produce value.

    When you have your value stream mapped, it will be much easier for you to see which processes are owned by what teams and who is responsible for measuring, evaluating and improving that process. This big picture will enable you to detect the steps that don’t bring value and eliminate them.

  5. Create Continuous Workflow

  6. After you mastered your value stream you need to make sure that the workflow of each team remains smooth. Have in mind that it may take a while.

    Developing a product/service will often include a cross-functional teamwork. Bottlenecks and interruptions may appear at any time. However, by breaking up work into smaller batches and visualizing the workflow, you will able to easily detect and remove process roadblocks.

  7. Create a Pull System

  8. Having a stable workflow is a guarantee that your teams can deliver work tasks much faster with less effort. However, in order to secure the stable workflow, make sure to create a pull system.

    In such a system the work is pulled only if there is a demand for it. This lets you optimize resources’ capacity and deliver product/services only if there is an actual need.

    Let’s take a restaurant for example. You go there and order a pizza. The baker pulls your order and starts making your pizza. He doesn’t prepare tons of dishes in advance because there isn’t actual demand and these tons of dishes can turn into a waste of resources.

  9. Continuous Improvement

After going through all previous steps, you already built your Lean management system. However, don’t forget to pay attention to this last step, probably the most important one.

Remember, your system is not isolated and static. Problems may occur at any of the previous steps. This is why you need to make sure that employees on every level are involved in continuously improving the process.

There are different techniques to encourage continuous improvement. For example, every team may have a daily stand up meeting to discuss what has been done, what needs to be done and possible obstacles. An easy way for process improvements on a daily basis.

Benefits of Lean Management

The growing popularity of Lean management principles comes from the fact that they actually focus on improving every aspect of a work process and involve all levels of a company’s hierarchy.

There are a few major advantages that managers can benefit from.

  • Focus. By applying Lean, you will be able to reduce waste activities. Therefore, your work force will be focused on activities that bring value.
  • Improving productivity & efficiency. When employees are focused on delivering value, they will be more productive and efficient, because they won’t be distracted by unclear tasks.
  • Smarter process (pull system). By establishing a pull system, you will able to deliver work only if there is actual demand. Which leads to the next one.
  • Better use of resources.When your production is based on actual demand, you will be able to use only as many resources as needed.

As a result, your company (team) will be much more flexible and able to respond to consumer’s requirements much faster. In the end, Lean management principles will let you create a stable production system with a higher chance of improving overall performance.

In Summary

Lean management is more like a guide for building a stable organization that evolves constantly and helps to identify actual problems and remove them.

  • The main purpose of Lean management is creating value to the customer by optimizing resources.
  • Lean management principles aims to create a stable workflow based on actual customer’s demand.
  • Continuous improvement is a major part of Lean management, ensuring that every employee is involved in the process of improving.

Up Next

Step 2

First Steps in Implementing Lean Management

Continue to Next Article

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