Lean thinking, what is it?

Lean thinking

I mentioned the phrase, lean thinking pretty often.  As I indicated before, the term was coined by James P. Womack and Daniel T. Jones.  It is used to describe the process of making business decisions based on Lean Principles.  

What are the principles of lean?

  1. Customer Value 
  2. Identify all the steps in the value stream and eliminate waste.
  3. Make the value-add steps flow.
  4. Let customers pull value from the next upstream activity.
  5. Continuous Improvement 

The foundation of lean thinking

This list of principles is the foundation of the Lean system.  It is a collection of thoughts, behaviors, or propositions that guide what we had known as Lean Thinking.  

All effort directed to improve a process starts with identifying value from the customer lenses.  The continuous improvement goal is to deliver the Customer the highest product or service quality, at the lowest possible cost, in the shortest lead time.  Consequently, the focus of all our decisions is quality, cost, delivery, and people.  In other words, the focus is on those things that the customer value.

Process Improvement and the customer

If the focus is on customer value, then it is logical that the next step is to identify the value stream. That is to say, to identify all the steps from request to delivery and eliminate waste.  Waste is defined as those steps that do not add value.

The third principle is to make the value-add steps flow.  Eliminating delays, waiting time, and other sources of waste, the flow improves.  Therefore, the total process time would be shorter. Once this happens, let them pull value from the next upstream step.  That is to say, that your clients will indicate when they need more inventory.  Continuous improvement is the repetition of the first four principles.  Once you improve one process, standardize, train, and start improving again.

Lean thinking vs. traditional thinking

It is necessary to put aside old behaviors and ways to change the culture by embracing continuous improvement thinking.  To make decisions based on customer value and flow is not what you learned in business school.  Give your team the power to change things is not common either.

The table below presents various examples of each thinking type, side by side.  You will recognize some principles and behaviors that I mentioned in previous posts.  For example, to empower the team to improve their workplace versus bringing external resources.

Lean thinking vs traditional thinking

It takes time to get used to this type of thinking.  However, practice lean thinking every day, everywhere, by everybody is worth it.  Above all, your customers will notice the difference, and your business bottom-line will be better.

Customer value, what is, and how you define it?

The journey to transform your business into a continuous improvement enterprise should start with the definition of value. The CI business management model defines the value of a product or service from the customer’s point of view. How much your product or service is worth for the customer? What are the expectations?

How you find your customer expectations?

Only the customers themselves can tell you. There are a couple of ways to get their input, talking with them, or using social media. The best time for a conversation is right after they received the product or service. Ask about their experience. What do they like? Do they have any suggestions? Listen to what they have to say and watch their demeanor. Social media accounts are another way to receive feedback from customers. Review the comments and ratings often. You can also create polls to survey their opinion.

Customer Value Definition

The information from these three different sources will give you the value definition from the customers’ point of view. Value definition is a critical piece to start your continuous improvement quest. You will use it to classify each process as value-added or non-value-added. Value-added activities are those that transform input into output or change materials or information. In other words, the customers are willing to pay for it. Everything else is non-value-added or waste.

Example of value-add activities

When you go to a restaurant, you expect to receive in a reasonable amount of time the plate you ask for. You also expect that the staff follows any special instructions like cooking the meat the way you request it. You will pay for the food and the service without hesitation. If the restaurant messed up with your plate, that is a defect. Now they have to prepare a second plate, which is overproduction. Both things are waste or non-value-added activities. I bet that you, the customer, are not willing to pay for them.

Businesses need to complete various processes that are critical for operation but do not add value to the customers. Examples of necessary non-value added activities are hiring, payroll, and month-end financials.

Customer value and your business

The entire flow from the customer order to the product or service received is drawn using a value-stream map (VSM). VSM is a special type of flow chart where you can visualize the flow of information and materials. This map is a tool that allows you to see waste and plan how to eliminate it. How to create a VSM will be the subject of a future post.

The priority of continuous improvement is to eliminate waste. Waste elimination will create faster and bigger results. Second, it is to challenge and reduce the necessary non-value-added activities. Minimize the quantity of non-value-added steps will further improve flow and reduce costs. Finally, you will work on optimizing value-added steps.

How can you identify the 7 types of waste?

how can you identify waste?
Waste can be deceiving, learn how to identify waste in Lean

Value-added means those activities that change raw material or information into value for the customer. Any step that does not serve the purpose of providing value for the customer is non-value-added or waste. This type of activity adds cost or time but does not add value. One way to identify what areas of your business need change is by identifying waste. How can you identify waste?

Use the back-door method to identify waste

For people with continuous improvement experience, it is easier to identify waste. They will see waste jumping out in front of them. For most people, finding waste is not an easy task. If you are one of those people, use the back-door method.

Waste is everywhere, and probably things that you see now as part of the process, are waste. With the back-door approach, you look for the opposite of waste, work. Work is the value-added activity in the area. When you cannot see waste, find the work, and everything else is waste!

How to identify waste

Follow the following five points or steps while focusing on one process.

  1. Look at the three real things, the functional area, the facts, and work-in-process. Do not guess or let the emotions or company culture drive the way, use data-driven thinking. Be in the look-out for excess inventory.  
  2. Ask what the operation is about, what is the purpose of the process?
  3. Ask why the operation is necessary? Is there a better way to accomplish that purpose?
  4. Everything that is not Work is waste. Draw the process steps, and everything that does not execute the function is waste. 
  5. Ask why at least five times to find the root cause or reason for each step to exist. Ask how you can change the process. Create an improvement plan with the information gathered and execute it as soon as possible.

If you follow these steps every time, soon you will grasp the concept. It is important to understand the purpose of the area. Why the process exists and what is the value for the customer are important pieces of information for effective waste identification.