Principles

Lean Enterprise

Tools & Techniques

Glossary

Origins

The ideas behind what is now termed lean thinking were originally developed in Toyota's manufacturing operations - known as the Toyota Production System - and spread through its supply base in the 1970's, and its distribution and sales operations in the 1980's. The term was popularised in the seminal book The Machine that Changed the World (Womack, Jones & 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 popularity of this book arises form the fact that it 'decoded the DNA' of the Japanese system , and formulated universal principles, from which a variety of industries could customize according to their requirements.

The Key Lean Thinking Principles

The starting point is to recognize that only a small fraction of the total time and effort in any organization actually adds value for the end customer. By clearly defining Value for a specific product or service from the end customer's perspective, all the non value activities - or waste - can be targeted for removal step by step. For most production operations only 5% of activities add value, 35% are necessary non-value adding activities and 60% add no value at all. Eliminating this waste is 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 firms 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 reorganized 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 synchronized 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. Creating flow and pull starts with radically reorganizing 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

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 a lean enterprise.

Applying Lean Thinking in Different Sectors

Lean Thinking can be applied to any organisation in any sector; although its origins are firmly in an automotive production environment, the principles and techniques are transferable, often with little adaptation - and we have a wealth of case study evidence that backs up this assertion. Lean Thinking (Womack and Jones, 1996) showed how firms in several industries in North America, Europe and Japan followed this path and have doubled their performance while reducing inventories, throughput times and errors reaching the customer by 90%. These results are found in all kinds of activities, including order processing, product development, manufacturing, warehousing, distribution and retailing.

Implementing Lean Thinking - The Tools and Techniques

A number of tools and techniques have been developed to support the lean philosophy, to enable organisations to apply the ideas and implement change. Consequently, there now exists an extensive toolkit to help the lean practitioner. Examples include the Five S's (five terms beginning with the letter S utilised to create a workplace suited for visual control and lean production), Kaizen Blitz (a process function to plan and support concentrated bursts of breakthrough activities), Value Stream Mapping, and Goal Alignment (a visual management tool allows management to select the most important objectives and to translate these into specific projects that are deployed down to the implementation level).