In my last column, I called Lean Thinking a tool. Womack and Jones refer to it as an approach or method to improve performance. It is just one of many specialty implements available to improve your business. And when implemented precisely and sufficiently, it becomes a culture with endless returns.
So what is this Lean Thinking?
Lean Thinking is an approach, based on the “lean production” process developed by Toyota to manufacture automobiles after WWII, to emphasize activities that produce value to your customer while eliminating waste (activities that don’t produce any value to your customers).
It sounds simple, but ask yourself how does your ‘customer’ specify the ‘value’ of your product or service in terms of meeting their needs at a specific time for a specific price? Then ask yourself when you price this product/service and look at all of the costs that are added above its raw cost, how many of these costs provide ‘real’ value to the customer and how many are a ‘convenience’ to you.
This is the first Key to Lean Thinking—specifying value in terms of the ultimate customer.
If you look at any product or service and define all the various steps it takes to deliver the product/service from first contact with the customer through last contact with the customer, you will have defined what is termed the value stream.
This simple process will allow you to determine which steps create ‘real’ value, which steps create ‘no’ value but are currently unavoidable, and which steps have ‘no’ value and can be immediately eliminated (waste).
The second key to Lean Thinking is defining the value stream. With this definition you are in a position to make improvements my eliminating the waste and start making process improvements to eliminate the steps with no value that are currently unavoidable.
When you define the value stream you will often find that work is piled up in different departments waiting to be performed, with each department designed to be highly efficient when it operates. But does the work flow efficiently between each of these departments, or does it look more like a stream dammed up by beavers?
Thus the third key to Lean Thinking is creating flow, breaking the paradigm of batch and departmental thinking and moving towards ‘continuous flow’ where activities move smoothly from the first step to the last step with little or no dwell time in the process.
In creating flow the ultimate batch size is one unit, delivering one product/service at a time.
This leads to the fourth key of Lean Thinking: Pull—letting the customer demand product versus forcing product onto the customer.
This isn’t about stocking inventory; this is about over-stocking inventory. It’s about establishing replenishment systems based on customer demands to fulfill what customers want when they want it,and to avoid discounting when you get stuck with product when customers’ fads change.
The fifth and final key to Lean Thinking is perfection.
If Lean Thinking is implemented precisely and sufficiently, it will become a culture—one of perfection, one that strives for continuous improvement up and down that value stream. It'll become a culture that pushes for continuous improvement throughout the value chain, one that is achieving endless returns.