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Lean Management: Three Principles You Need to Succeed

Posted on: June 10, 2021

When it works, Lean management provides such an important competitive advantage that it has spread far beyond the factory floor to include service industries, government agencies, healthcare, and more. The problem is that it doesn’t always work. The reason is simple. In most implementations, there’s not enough focus on the management part of the Lean management equation.

David Mann, the author of the highly respected book Creating a Lean Culture, observes, “Lean implementations fail because Lean is too easy! That is, it is too easy to implement the physical or procedural trappings of Lean production while failing completely to notice the need for a parallel implementation of Lean management.”

This article reviews the basics of the Lean philosophy and then goes on to identify three key management principles to help practitioners succeed in the real world.

Lean Basics

Lean Basics

 

The Lean approach to business processes, originally derived from the enormously influential Toyota production system (TPS), is based on three fundamental principles: delivering value as defined by the customer, eliminating waste, and continuous improvement.

What is Value?

In Lean management, value is ultimately defined as “what the customer is willing to pay for.” Sometimes value is obvious. For example a car that doesn’t break down until 250,000 miles versus one that breaks down after 15,000 miles. In Lean Management for Healthcare, Brad White points out that in healthcare, and many other sectors, determining value is a complex task, often involving individuals who would not be part of a conventional operation. For example, Scott Cook, the enormously successful founder of the financial software giant Intuit, recruited housewives to test his initial consumer product rather than relying on his engineers, a revolutionary practice at the time but one that clearly paid off.

What Is Waste?
In Lean management, waste is defined as anything that doesn’t contribute to value as perceived by the customer. On the factory floor, eliminating waste may be as simple as moving parts closer to an assembly line so an operator doesn’t have to waste steps getting the necessary part. Eight categories of waste have been codified in Lean management literature: defects, overproduction, waiting, underutilized talent, transportation, inventory, motion, and extra processing. The list is short, but identifying and eliminating these wastes in a real-world situation can be complicated. For example, in the comprehensive The Lean Practitioner’s Field Book, Charles Protzman and his colleagues identify 18 different types of waste just in the subcategory of transportation (moving items within a factory).

What Is Continuous Improvement?

This is often held to be the most difficult aspect of Lean management. It is typically explained as a four-step process:

  1. PLAN: Make a plan for an improvement in a process or the elimination of waste.
  2. DO: Carry out the plan on a test basis.
  3. CHECK: Monitor the results (on a quantitative basis if possible). This step is sometimes called “Study.”
  4. ACT: Implement or reject the plan based on the results

In Lean thinking, the final step becomes the basis for another PDCA cycle, which repeats over and over again.

continuous improvement

key prinicples

Key Principles

Having outlined the basics of Lean management, we will now turn to three key principles that support its successful implementation in real-world situations.

Lean Management Principle 1: Process Is Primary

One of the most important principles of Lean management is: “Take care of the process and the results will take care of themselves.” Importantly, taking care of the process doesn’t simply mean designing it well. It also means making sure it’s working properly, week by week, day by day, and hour by hour. This involves real-time monitoring and fixing process problems when they occur, rather than finding workarounds and hoping tomorrow will somehow take care of itself, even though the problem remains.

Without process focus and constant monitoring — the management side of Lean management — failure is likely. Lean conversions need to overcome years of corporate inertia and personal habits that are hard to change, such as focusing exclusively on results after the fact. Creating a Lean Culture describes how Lean practices transformed an emergency room where patients had to wait four hours just to be seen to one that completed the door-to-discharge process in just over two hours — only to lose all those gains due to backsliding. This can happen in any organization.

Lean Management Principle 2: “Grasping Reality” Improves Processes

Proponents of Lean management often point out the limits built into standard management practices that focus solely on results. To quote The Lean Practitioner’s Field Book, “People can’t get anything done because they are always in meetings.” Managers gather in a conference room armed with computer-generated reports that compare production targets with goals, shortfalls, and similar measurements. First — and anyone in business knows this is not a trivial problem — there are often disagreements about whose numbers are right. Beyond that, graphs on screens or numbers on sheets of paper simply can’t yield anywhere near enough information to solve practical problems. Lean proponents compare this approach to driving a car looking only in the rearview mirror.

In contrast to attending meetings, grasping reality means being there — on the factory floor in the case of manufacturing operations. This is often referred to as a gemba walk, the purpose of which is to simply observe what’s actually going on. (Gemba means “the real place” in Japanese.) Grasping reality also implies being there to observe processes when problems really happen, not days or weeks later. And it means involving everyone concerned with a process whenever there’s an attempt to improve it.

Lean Management Principle 3: Visual Communication Is Central

Tracking what’s really happening and collecting real-time information about a process isn’t enough to make an assembly line or any work group efficient. It’s also important to communicate the status of operations among line workers, supervisors, and higher-level managers. In Lean manufacturing, for example, parts are pulled from inventory as needed rather than pushed from inventory whether they’re needed or not. Work stations therefore need a way to communicate that they need more parts. Managers need to track the location of work-in-progress, be aware of the status of workstations, and know whether or not assembly lines are operating at takt time, that is, with cycle times fast enough to meet customer demand.

Example of a Lean manufacturing whiteboard

A typical whiteboard of the type used in Lean manufacturing. Courtesy of Magnatag.

Management is crucial

Management Is Crucial

The improvements in quality, efficiency, and profitability promised by Lean can only be achieved when management is intently focused on processes — and not exclusively on results. This means being there, or “grasping reality,” on an hour-by-hour basis and effectively communicating the needs and problems that come up so they can be solved immediately. In fact, Lean management may require more, rather than fewer, supervisors, but the ultimate cost reductions Lean provides will more than cover the added expense. Simply put, management is crucial. Setting up Lean processes without creating a parallel system of Lean management is a recipe for failure, and failure has a very negative effect not only on an assembly line but also on the bottom line.