Lean Management—From the Basics to the Advanced

Laura Piana
Business skills

Lean management has its origins in the Toyota Production System (TPS), which was developed in the 1950s. Originally, lean was a product of manufacturing and a response to limited budgets and resources. It focuses on the critical use of existing resources and the elimination of waste. Lean principles have now found their way into many industries - even outside of manufacturing, for example in project management project management or administration.

Lean Management streamlines processes and ensures greater value creation. In theory. In practice, lean faces many hurdles, especially in the early stages. Some people experience downright existential fear when they hear the term "lean". If you want to implement lean successfully, you need time to implement it, the right time management, patience, the right mindset and the right methods. But the effort is worth it!

Lean management—definition

Lean may be a good 70 years old, but it is still highly relevant. Why, you may ask? Because the ability to adapt and innovate is critical to a company's competitiveness and success. Lean provides a solid and proven system for doing just that. Lean management is more than a methodology. Lean is a philosophy that companies and their people embrace. It focuses on how to deal with activities that do not add value. Value is what customers are ultimately willing to pay for.

Goals and principles of lean management

Therefore, lean management focuses on continuously optimizing processes to increase overall value. Customer satisfaction should increase and costs should decrease. This requires everyone to do their part. Employees deal with processes that need improvement on a daily basis, and managers can use their bird's eye view. Constantly challenging the status quo is a key driver. The result is better use of everyone's time, fewer disruptions, lower costs and shorter delivery times.

In summary, the key levers of lean are customer focus, continuous improvement, quality management, teamwork, but also the personal responsibility of each employee and open information and feedback processes. In addition, all lean approaches and measures must always be checked for feasibility and suitability for everyday use. This requires time, adjustments, and regular observation of processes from a bird's eye view.

Seven types of waste

An important foundation of lean management is the seven types of waste. Those who know them can identify and avoid them. Anything that does not contribute to the creation of value should, first and foremost, be considered waste. Seven types can be distinguished into:

  • T for Transport

  • I for Inventory

  • M for Motion

  • W for Waiting

  • O for Overproduction

  • O for Over-engineering

  • D for Defects, this refers to waste that involves a lot of rework.

To reduce this waste of time and resources, all these parameters are put under the microscope. Let's take transportation as an example. To save time, effort, and cost, you and your team can make sure that each step in the supply chain is as short as possible, or that the tools you need are right where you need them. When "transporting" information, it is worth taking a look at the interfaces. Are they necessary? Are they too complex? Where can adjustments still be made?

Lean management addresses waste in three ways: with lean systems, lean methods, and lean tools.

"Lean" methods and tools

Lean management distinguishes between lean production or lean manufacturing and lean administration. This separation also affects which methods and tools are useful. Some tools are only suitable for production, while others are also suitable for administration. These tools include Value Stream Mapping or Value Stream Design. This tool helps to visualize and analyze the value chain. Thus, value stream mapping enables better production and information flow.

Another lean tool is 5S. This is an acronym for five Japanese terms that can be loosely translated as sort, set in order, shine, standardize and sustain. 5S promotes orderly work because everything is where it should be.

Other lean tools are dedicated to problem-solving and finding the root cause of defects and problems. Useful tools include root cause analysis using the 5⁠-⁠why analysis and the fishbone diagram, also known as the Ishikawa diagram. In both cases, it is important that employees feel responsible for their area and the overall process, and that they have the independence to deal with problems, especially unforeseen ones.

Tools for lean production

Lean tools better suited to manufacturing are OEE, SMED and Poka Yoke.

OEE stands forOverall Equipment Effectiveness. It is determined based on metrics. OEE makes it possible to evaluate the productivity of specific equipment and find out where to start making improvements. OEE consists of three factors: the availability factor, the performance factor and the quality factor. These are measured directly on the machine using software. By breaking it down beforehand, you know which factor is dragging the result down the most or, conversely, positively influencing it. The ultimate goal of OEE is to monitor success and identify bottlenecks.

This acronym stands for Single Minute Exchange of Die. SMED can be compared to a pit stop in Formula 1 racing. The time during which the machine is at a standstill should be kept as short as possible. The goal of SMED is to reduce the setup times per tool change. This also helps to respond more quickly to customer requests.

The third option is Poka Yoke. It means something like "avoid unfortunate mistakes". Examples of Poka Yoke include the USB flash drive, parental controls on electrical outlets and online forms that indicate when information is missing or incorrect. In all of these cases, technology is preventing human error. Poka Yoke can be applied to finished products as well as the workplace.

The PDCA cycle briefly explained

PDCA represents a core methodology that is universally applicable. The four letters stand for Plan, Do, Check and Act. Each of the four phases involves different tasks. And these are repeated cyclically in the sense of continuous improvement. In this way, PDCA helps your team analyze and assess the status quo AND the future state, as well as implement appropriate changes. Reflection is always important in this process. If a decision leads to failure, it means: try again! If successful, the new process can be made standard.

PDCA can be viewed very well from a Kaizen perspective. Kaizen loosely translated means, a change for the better. We can think of Kaizen as a philosophy of dealing with the little things that make life difficult on a daily basis. Every little improvement helps. Two basic ideas of Kaizen are stabilization of success and continuous improvement.


Lean collaboration

Lean is always a team effort. All employees must make a contribution. And for this to happen, the team needs the appropriate motivation. So how do you get people to embrace lean, live lean, and support lean? An important factor is to involve employees and make them aware of their own contribution to the overall success. An important basis for satisfaction and an essential part of lean management is SFM. SFMstands forshop floor management. It's where managers work together with employees, supporting them directly at their workstations and training them according to their needs. Again, the focus is on problem-solving, continuous improvement of products and processes, and regular monitoring and improvement of efficiency. Team board meetings, which take place once a week or even better, daily, help to achieve this.

A Gemba Walk also fosters collaboration and sharpens the focus of managers. Gemba aims to free up time for the unexpected and helps empower employees. A Gemba Walk regularly brings team leaders or responsible engineers from the white-collar environment directly to the scene and into conversation with employees. Along the way, they gather knowledge and deepen relationships. The tour is best done with a checklist that you've previously created together as a team, which you can then check off along the way. It is also useful to set one focus per day, for example, maintenance on Monday or inventory on Wednesday. It is important that you involve employees in all measures, demonstrate the value of their work and also deal with mistakes constructively.

Further developing lean?

Lean takes place within the company, but it also has an external impact. One important aspect is the customer takt time. In general, the customer takt time indicates the time after which a customer will next purchase the product or service. The production frequency should be based on this.

In addition to production, inventory plays an important role. In many companies, production is based on the push principle—that means, people produce whatever the machines can produce. With the pull principle, it's the other way around. Instead of continuous output, production is on demand. This eliminates the need for storage and transport. The right choice in production and warehousing is made according to the situation and is always based on a prior value stream analysis. A well-known option of warehousing management is FIFO, i.e., the principle "First In—First Out". It is particularly suitable for products with a sell-by date, such as food, cosmetics, or pharmaceuticals.

By the way, a useful tool to visualize demand signals from customers and to work closer to the customer takt is Kanban. With this method, orders and work steps can be mapped and processed very well.

If you want to get even "leaner", you may want to consider further streamlining the value stream to further reduce overall waste. Bottleneck elimination and line balancing can help. Every bottleneck slows down the manufacturing process. Fortunately, there are many ways to avoid bottlenecks. Adding shifts on the "bottleneck machine" can help, as can adjusting batch sizes or even outsourcing. Line balancing is a manufacturing strategy that aims to better match the way people work at the machine and the way the machine works with the customer's takt. The production time should correspond to the customer's takt time. It relies on time tracking, an accurate understanding of processes and interdependencies and the identification of bottlenecks.

Implementing lean management—step by step

Lean management means systematically identifying and eliminating activities that do not add value. Recognizing the different types of waste is a matter of practice and is always a team effort. In addition, lean is characterized by the fact that the processes are iterative. In the end, there is always room for improvement. In addition to appropriate methods and tools, lean requires a positive and realistic attitude on the part of managers and employees. Decisions must always be actionable, and they must prove their worth in day-to-day operations.

Learn more about lean management and how to put it into practice in our two e⁠-⁠learning courses:

Lean Management: The Basics

Advanced Lean Management

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