Lean in a Nutshell

by Tom McBride

Partners for Creative Solutions, Inc.

By now you have probably heard the term “lean” used in at least one business improvement context.  Perhaps it was lean manufacturing, lean enterprise, lean accounting, or even lean retailing.  Many people assume that lean methods attempt to improve efficiency by simply starving the organization of resources; however, lean is actually all about working smarter.  It is fundamentally a philosophy of reducing customer order-to-delivery cycles by eliminating sources of waste (wasted time, wasted material, wasted capital, or wasted opportunity).

The term originated in 1987 when Jim Womack and his team at MIT were working to understand and describe the new manufacturing system pioneered by Toyota .   Womack’s team chose the lean label, because the Toyota system required less of everything (effort, space, defects, time, capital, inventory, etc.) than conventional production systems, while producing more.  Several years later Womack and Jones distilled the lean philosophy down to five principles in their book “Lean Thinking” (1997).

1. Specify the value desired by your customer.
2. Identify the value streams used to provide that value and challenge all of the wasted steps.
3. Make the product flow continuously through the remaining, value-creating steps.
4. Introduce “pull” between all steps where continuous flow is impossible.  Note:  The “pull” method minimizes throughput time by maintaining low levels of work in process.
5. Manage to achieve perfection.

  Dozens of tools and building blocks are available to support effective implementation of these principles, including 5S (workplace organization), quick changeover, mistake proofing, pareto charts, and cause-and-effect diagrams.  But tools and methods are only part of the solution.  Strong leadership and the support of a trained and motivated workforce are absolutely crucial to success.

From its beginnings in the automotive industry, the lean philosophy has spread globally to manufacturing companies of all sizes in a variety of industries.  It has proven to be the most powerful production system in the world for improving productivity and customer service, while reducing lead times, inventories, and defects.  Outside of manufacturing lean has produced impressive results for banks, insurance agencies, retailers, distributors, law firms, and other types of organizations.

Only a fraction of businesses have adopted the lean philosophy to date, and not all transformation attempts have been successful.  The process is not easy, but those that succeed increase their ability to remain competitive for the long term.