What is Lean Management? - A Complete Tutorial

The concept of Lean Management is multiplying in the business sphere. Companies worldwide have adopted this management tool for its core values and positive impact on their workload performance. 

From marketing to software development, you can apply Lean to almost any business process. 

The Lean methodology has three main principles: 

1. Steady improvement 
2. Delivering value from the customer’s perspectives 
3. Eliminating waste. 

In this article, you will learn about Lean management’s fundamental concepts, including its principles, benefits, tools, and much more. 

First, let’s ask the most critical question. 

Basic Concepts of Lean Management Tutorial 

• What is Lean Management?
• Stakeholders of Lean management
• Basic principles of Lean
• Types of waste in Lean
• Tools of Lean
• Benefits of Lean management
• Disadvantages of Lean Management
• Lean vs Agile

What is Lean Management? 

Around 70 years ago, the Toyota Production System laid the foundations for Lean. The ultimate goal was to reduce things that did not bring value to the end product. By eliminating waste, productivity, efficiency, time, and costs were improved. Today, many global industries have adopted this tool. 

Lean is a universal management tool that can be applied in various industries. 

It is evident Lean focuses on shared leadership and responsibility. It stands on two essential pillars: 

1. Continuous improvements and 
2. Respect for the people 

Some popular companies using Lean management include: 

• Nike 
• Intel 
• Caterpillar Inc. 
• Ford 
• Toyota 
• John Deere 

Stakeholders of Lean management 

Lean has three main stakeholders: 

• Customers: An enterprise’s primary goal is always to improve its customer service. It achieves this by identifying and resolving the issues and concerns of the customers first. 
• Employees: An organization’s most valuable asset is its employees. The enthusiasm, productivity, and efficiency of an employee contributes to the overall success of the organization. 
• Organization: The Chief Executive Officer, board members, and the business owners make up the organization. It also includes the established policies and procedures. 

Basic principles of Lean 

The Lean methodology relies on five basic principles. 

Identify value 

If a company wants to sell a product or a service to a customer, it needs to add value to its needs. 

What does adding value mean? The value is a problem you are trying to solve for the customer. The customer pays for the solution that the company provides.

In this process, anything that does not bring value to the end product or solution is considered a waste. Therefore, the first step is to ask the question: What is the value you want to deliver? 

Map the value stream 

In this step, the company’s workflow is mapped. It includes the people involved and the actions that need to be taken to deliver the end product. In the process of mapping, you can also identify the parts that do not bring any value. 

The principle of value stream mapping has two goals: 

• To show where the value is generated. 
• To identify which parts of the process do or do not produce value. 
• To have an overview of which team owns which processes. 
• To see who is responsible for different areas of the process, such as evaluation and improvement. 

Create the continuous workflow 

It is vital to a process to make sure that the team’s workflow is smooth. This step may take some time after you have your value stream. 

An essential step in the process of developing a product or a service is cross-functional teamwork. You can remove any roadblocks in your workflow by dividing your work into smaller tasks or batches and having a workflow vision. 

Establish a pull system 

A stable workflow is critical for the team to deliver faster results with minimal effort. Creating a pull system can be essential to secure and stable your workflow. 

What constitutes a pull system? Here, the work is pulled only on demand. The teams can optimize their resources’ capacity and deliver services or products only if they need them. 

Seek continuous improvement 

This last step is vital to building your Lean management system. 

A system needs continuous improvement since problems can occur at any of the previous steps in the process. Employees on every level can apply different techniques for improvement. An example would be to organize daily meetings to discuss what has been achieved, what the upcoming tasks are, and what problems can be anticipated. 

Lean management’s principles contribute to a stable production system that improves the overall performance of your workforce.

Types of waste in Lean 

In Lean, there are three types of waste. 

• Mura: Waste produced due to fluctuations in the customer’s demands. 
• Muri: Waste produced due to overburden (trying to do too much work at once). 
• Muda: Waste produced due to doing work that brings no value. 

Tools of Lean 

From manufacturing to finance, several industries use Lean tools to manage and eliminate different types of waste in organizations. 

There are different types of Lean tools: 

• Bottleneck Analysis 
• JIT: Just in time 
• Root Cause Analysis (RCA) 
• Error Proofing 
• Overall Equipment Effectiveness (OEE) 
• Value Stream Mapping 
• Plan-Do-Check-Act (PDCA) 
• Jidoka 
• Takt Time 
• Heijunka 
• Poka-yoke 
• Kaizen and many more. 

Benefits of Lean management 

You can benefit from the several advantages of the Lean methodology. Some of them are: 

• Improved productivity and efficiency: Employees who apply Lean focus on delivering value. They are more productive and efficient as they are not distracted by other unimportant tasks. 
• Smart pull system: The pull system is an intelligent process based on the customers’ actual demand. 
• Better use of resources: Since you can produce products/services on-demand only, you can use resources better. 
• Improved focus: Companies reduce waste when they apply the Lean methodology. Hence, your team can focus on essential activities that bring value instead.

Disadvantages of Lean Management 

There are several benefits to adopting the Lean methodology. However, it is vital to consider the following factors: 

Inventory 

In the Lean methodology, the number of stocks is reduced to decrease the carrying costs. By doing this, the companies depend on suppliers to make adjustments in the deliveries. So, any disruptions in the inventory processes can cause problems for the company. 

Change over might be difficult

Since the implementation style of Lean can differ from the traditional ones, employees may not always welcome it. Employees need plenty of patience to change over to Lean. 

Therefore, company leaders are supposed to be transparent about all the changes that can take place in the company. 

Implementation is expensive 

When you implement lean management in your company, all the past systems and processes will end. Therefore, companies need to be prepared to bring in new training programs and equipment to be comfortable with the high costs. 

Lack of time 

You need a lot of planning and time to implement Lean. To do this, you need to study your workflow and team activities and talk to them about things like company changes. You can conduct daily meetings to discuss completed and upcoming tasks, as well as any problems they can anticipate. 

Lean vs Agile 

The differences between Lean and Agile are: 

Conclusion 

Lean management is beneficial to many organizations for their growth and providing solutions to their customers’ actual problems. You provide real value to the customers because the main focus is resource optimization. 

Lean methodology principles enable the teams to create stable workflows based on actual demands from the customers. 

Therefore, we can conclude that the ultimate goal of Lean is continuous improvement. Every employee is involved in the improvement process.