LEAN THINKING: 14 Principles & Tools of Lean Management
A lean organization achieves its goals through the application of time-tested techniques and tools, backed by a strong philosophical foundation of continuous improvement and learning. Behind the lean paradigm are a set of management principles that when consistently applied, result in business success regardless of the industry one is in.
What is Lean Management?
Traditionally, management has been defined as the function that is involved in the planning, organizing, directing and controlling of resources so as to achieve organizational goals. In lean thinking, management is the systematic approach of enabling the organization achieve its lean initiatives in a focussed and efficient manner.
Most organizations fail to sustain their lean efforts due to lack of proper direction from management. The traditional approach of “control” does not work in a lean environment because it does not lend itself to the philosophy of empowering workers to find solutions to the business problems through observation, experimentation and learning.
The old way of doing things sees managers as people who should provide all the answers to workers on the ground. In lean thinking however, everybody works together with a clear focus on customer value and continuous improvement.
Lean Thinking Management Principles
The following 14 lean management principles which originated from Toyota provide the philosophical foundation required to achieve success in a lean system. Each principle is accompanied by a set of tools that can be used to attain the organizational goals.
These tools are meant to assist a company achieve results and should not replace a common sense approach to problem-solving. The application of lean tools must always be done with the underlying principle in mind. In short, the principle drives the tool and not the other way round.
1. Long-term thinking
Lean thinking organizations have a clear vision of where they want to be in the future. They have a clear picture of what needs to be done to achieve these goals and do not get distracted by the expediencies of the moment. The first principle of lean management can thus be stated as follows:
“Make decisions based on your long-term vision even if means making sacrifices in the short-term”
The lean tools that drive this principle are:
- Hoshin Kanri is a strategic planning tool that ensures the whole organization is aligned to a common goal and leaves little room for diversion. This is because everybody knows where the company is headed and their individual responsibilities in achieving these goals.
- Nemawashi is a consensus-based decision-making approach that reduces the time taken to achieve results. By the time a formal meeting is held to make a decision, all involved parties have been consulted and have made up their minds on where they stand on an issue.
2. Flow the Customer Value
This principle deals with identifying wasteful activities that do not add any value to the customer. Once the wasteful activities have been identified, efforts are made to either eliminate or reduce them. All the other steps are then aligned in a continuous flow which results in an increase in productivity, quality, safety and morale. There is also a marked reduction in costs as fewer resources are required for achieving the same results.
The lean thinking tools that support this principle are:
- Jidoka means building in quality into machines or process so as to prevent mistakes that have an impact on quality. This tool aims at capturing and correcting errors before they are passed onto the next process
- Line balancing is used to ensure that equal amount of work passes through process to avoid the bottlenecks that hinder smooth flow of value
- Cellular manufacturing increases flow by consolidating all the prerequisite steps that are required to assemble a product in one place. This also reduces the amount of time that is used when sub-assemblies are moved from one station to another
3. Produce at the rate of customer demand
Overproduction is defined as “producing faster or more than the customer is demanding”. It is one of the most costly forms of waste as it encompasses all the known wastes in lean manufacturing. By producing at a rate as close as possible to the real customer demand, costs are reduced substantially as there is very little unsaleable inventory in place.
The tools that support this principle are:
- Kanban system is a signalling device that informs a process what to do next whether it is producing a new product or replenishing raw materials.
- Takt time is a metric that determines the rate at which the end customer is demanding a product. All the processes must be synchronized with this rate so as to avoid non-delivery or over-production.
4. Level the workload
As companies cannot always produce at the exact rate of customer demand, production must be evened out across production facilities so as to ensure prompt delivery. The system works by accumulating a good number of customer orders and then scheduling them in an even production. This ultimately reduces the waste and strain of trying to build to an erratic order.
The lean tool used to level the workload is:
- Heijunka is the balancing of production to mitigate against the unpredictable spikes in demand that occur in a typical organization. This stabilises the production process and ensures the optimal utilization of available resources
5. Quality right the first time
A key tenet of lean thinking is that all processes must produce quality parts so that the end product to the customer is defect-free. This principle states that no process should produce, accept or pass on a defective part to the next process. Inspection is considered a wasteful process because resources have already gone into the production of defective parts. The aim should be to capture defects before they occur.
The Jidoka tool is also applied here as a means of capturing and reporting the occurrence of a defect. Another closely related tool is the andon which is also a signal to the process that an error has occurred that needs correcting.
6. Standardize and Improve
A standard is defined as the best known way of performing an action. The principle of standardization serves as a reference point for further improvement and also as a means of training new workers on how to perform tasks. Without standards there can be no way of improvement in a lean system.
Improvement on the current way of doing things is a continuous process and once an improvement is made, a new standard must be written. Standards are not cast in stone and must continuously be improved upon. The tool used to support this lean principle is the Kaizen event.
7. Use visual controls
The purpose of visual controls in a lean thinking organization is to communicate in a clear and unambiguous manner to the people working in a process as to the state of that process. Visual control is a lean tool used to bring problems to the surface and afford the workforce an opportunity to solve them.
When problems are hidden, there is no chance of solving them and this leads to stagnation of the lean initiative. With visual controls, deviations from the acceptable standard can be seen be all and countermeasure to bring the system back on line can easily be taken.
Tools used for visual control include:
- 5S is a systematic program that helps in orderliness and removal of waste
- Process control boards show the status of processes and whether or not they are within specified limits
- A3 reports capture all the necessary information needed in a summarized and concise manner to help in clear decision making
8. Use the right technology
Lean thinking organizations do not install technology just because it is the in-thing at the moment. They seriously consider whether the technology will assist them achieve the goals or whether it will be an impediment to the attainment of value for the customer.
A good example is ERP & MRP systems. While many organization will rush to install these complex systems, lean thinking firms will first concentrate on the simple problem solving and waste removal tools they have at their disposal. If a technology is deemed to be appropriate and relevant to their current problems, the lean thinking firms will surely go ahead and purchase them.
9. Leaders are grown, not bought
This lean management thinking philosophy calls for the development of competent leaders from within an organization rather than always hiring from outside. When this happens, the continuity of a business is guaranteed because there is a constant pool of possible leaders who are ready to take over when the time comes.
This constant mentoring of leaders who thoroughly understand the work and live the philosophy of a company is key in sustaining lean improvements because institutional memory is preserved.
10. Personal development of people
Lean constantly challenges team members to do their best to solve common business problems. By empowering the workforce to take charge in solving their own problems, lean companies improve upon their skills which ultimately has significant impact on the business.
The Job Instruction Method that was perfected at Toyota is one of the most important tools for improving the skills of the workforce in a lean environment.
11. Treat partners with respect
Treat suppliers and all other players in the extended enterprise with respect. This principle encourages cooperation and coordination within the extended enterprise which includes suppliers at all tiers. Suppliers and their suppliers are important part of the value chain that delivers the needs of the customer.
Lean thinking organizations work with their suppliers and help them to improve for the benefit of all the stakeholders. They understand that their success is dependent on the success of all in a win-win relationship that is defined by mutual respect and cooperation.
12. Gain first-hand understanding of problems
This principal focusses on problem solving that gets to the root cause by intimately interrogating the problem at source. The person trying to solve a problem must go to where the problem is occurring and observe the complex interactions of all the parameters before suggesting solutions.
Genchi genbutsu means “go and see” the source of a problem and find out root causes. It is a lean way of thinking that is not satisfied with second-hand reports but calls for physical confirmation at the ground.
13. Build consensus before acting
Because business decisions affect many people, lean thinking organizations use this principle of consensus–building to communicate widely before any implementation. This reduces resistance to lean programs and allows management to focus on the necessary actions required to succeed.
The nemawashi consensus building approach is the fastest way to gain acceptance of lean initiatives through prior consultations before final decisions are arrived at.
14. Become a learning organization
This principle of lean management emphasises the need of continuous evolution through constant reflection and re-adjustment based on the learning gained in the lean journey. Businesses must not stagnate in the past, but should continuously evolve to meet current and future challenges.