Where does Lean management come from?
The origins of the approach can be traced back to the manufacturing industry. As part of the International Motor Vehicle Program (IMVP), researchers James P. Womack, Daniel T. Jones and Daniel Roos examined the prevailing differences in development and production conditions within the automotive industry. In the outcoming book, “The Second Revolution in the Automotive Industry,” they developed new approaches for a development and production system with increased efficiency and quality compared to other systems. This was the basis for the development of Lean production, which was primarily coined by Toyota. The Japanese car manufacturer is considered a pioneer in the field of Lean management and introduced the so-called Toyota Production System (TPS) as early as the 1930s to reduce waste in the company. This measure made production more efficient as well as faster and cheaper. As time went on, the methods were adapted and generalized, expanding their influence on other industries. The term “Lean management” was created by Pfeiffer and Weiß in 1992, although the focus remained on production.
“Lean management deals, for example in the office routine, with the elimination of interface problems or undefined responsibilities in cooperation.”
Managers and management consultants continuously developed further the methods used, even beyond pure production. Over time, this gave rise to an entire management philosophy, which is now generally known as Lean management.
The optimization approach for leaner business processes nowadays exists in a wide variety of forms and is subdivided into many different applications, such as Lean development and Lean leadership. Lean management deals, for example in the office routine, with the elimination of interface problems or undefined responsibilities in cooperation.
The five principles of Lean management
Lean management is a management and organizational concept with the approach of continuous process optimization for efficient design along the entire value chain. It is therefore today aimed at all areas in the company where waste is created and errors happen, which want to be avoided. The goal is to harmonize existing processes, create a stronger customer orientation and reduce costs within the framework of a particularly process-oriented company management. In order to meet these requirements, companies may orient to the five principles of Lean management.
The five principles of Lean management
- Focus on the added value for customers (Identify value). First step is to identify from a customer’s perspective their wishes and requirements. In Lean management, a company’s activities should always be focused on creating this added value for customers. If this is not the case, it is considered as waste.
- Identifying the value stream (Map value stream) The second step is to take a close look at the entire value stream. At this point is important to identify the processes and activities that create actual added value for the customer. Based on this analysis, the particularly important core processes are highlighted and potential for streamlining or even saving processes may emerge.
- Ensure a smooth workflow (Create flow) Based on the value stream analysis, the next step is to plan all workflows and make them as smooth as possible. Particular attention must be paid to possible bottlenecks and cross-functional and cross-departmental cooperation of individual teams.
- Act according to the pull principle (Establish pull) To reduce waiting times or delays, it is recommended to establish a pull system, i.e., to align work with demand. This way of working conserves existing resources and guarantees a stable workflow.
- Continuous improvement (Seek perfection) This fifth and final step in Lean management is particularly important because it involves continuous improvement. The processes and workflows in companies are not static, and the conditions and requirements are also subject to change. Therefore, seeking for perfection is a decisive and ongoing component in Lean management.
Numerous methods and tools help to put these principles into practice and support them. Kaizen, the 5S method and Kanban are well-known examples, which will be explained in detail in a further article here in the magazine.
Advantages and disadvantages of Lean management
Since it is a universal approach, the methods of Lean management can be used in different industries not limited to a specific company size. They are individually adaptable to the needs of customers and the respective company. Properly implementation of mentioned methods will lead to quickly visible improvements with relatively small effort, since most of them do not require lengthy training or continuing education and can be realized promptly in company’s teams. This increases the motivation of employees to actively apply the methods. For a holistic application in the company, it is particularly important to root the awareness of Lean management. If this succeeds, it can lead to improved productivity, quality, customer satisfaction and competitive advantages. However, active application in practice requires a high degree of self-discipline. To be motivated, it is inevitable that employees understand the methods and identify with the benefits. The approach to reduce waste could also jeopardize a healthy error culture. If the Lean approach is implemented too strictly, there is a risk that employees will be given the impression that mistakes are not allowed anymore, as they have been taught to reduce waste and constantly become more efficient. However, sometimes it is not possible to further optimize the processes due to the prevailing circumstances.
In Lean management, main focus is on streamlining processes and creating value for customers. For implementation, companies can use the five principles of Lean management as a guide: identify value, map value stream, create flow, establish pull and seek perfection. If the principles are implemented properly and anchored holistically in the company, productivity, quality, and customer satisfaction can be increased. The entire company, i.e., both employees and managers, must accept the application of Lean methods and promote them. Real efficiency can only be accomplished, if all parties pull together, otherwise the processes and methods cannot be implemented in a stable manner.