Lean Management Definition
The origins of lean management, which is widely found throughout the business world, sprang from a simple concept. The core philosophy behind lean is that customers do not pay for mistakes or waste but value. As such, companies need to increase the value of their products or services in order to maximize profit. Lean management offers an opportunity to drive up value and promote continuous improvement.
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Significance
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Defining lean management enables a company to establish a sense of direction and create corporate objectives. Implementing lean systems enables a company to eliminate processes that do not offer value and track improvement via a set of reliable metrics. This form of management allows company executives to have a clear picture of what is working correctly for the company and what areas are in need of changes.
According to USA Today's Paul Davidson, thousands of manufacturers remain profitable even during recession by using lean principles to become more cost-efficient. Lean management has proven to be an effective component to maintain a company's sense of economic viability, even during rough financial times.
Function
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Lean management entails the elimination of waste by examining processes and striving for continual improvement. As identified at the Lean Enterprise Institute, there are five inherent principles involved with the implementation of lean techniques: identifying value, value-stream mapping, creating flow, establishing pull and seeking perfection.
Personnel from a variety of departments are often used to look at a single process. This allows for a wide range of perspective and helps prevent "this is the way it's always been done" mindset.
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Benefits
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Lean manufacturing can help to eliminate defects. Part of the process of streamlining production involves using more "pull" than "push." This means that later production stages dictate what is happening in earlier ones, instead of vice versa.
Without using lean, a company might generate a thousand pieces at an early stage, and then try to push through. When this happens, a defective processing step might not be discovered until after the thousand pieces have been produced. In a lean system, though, it is possible to discover faulty material earlier and then halt production and fix the problem.
Considerations
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The prevailing theme of lean management is to focus on eliminating waste. To do so, an organization needs to identify areas where wasteful actions occur. In her article "Principles of Lean Thinking," Mary Poppendieck establishes seven potential wastes: overproduction, inventory, extra processing steps, motion, defects, waiting and transportation. Employees involved in the field of lean management need to examine processes and look for examples of these.
Effects
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Lean thinking has moved beyond the world of manufacturing and is now used by managers in a variety of disciplines. Lean management can be found in such areas: construction, health care, government and maintenance. The companies in these industries which implement lean philosophy find greater awareness with regard to waste. Efficiency becomes a top priority and helps to maximize corporate profit.
Metrics
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An important part of lean management is developing a set of metrics for employees to document. Metrics are used in business to identify trends and record progress towards the ultimate goal of eliminating waste. They are also necessary to promoting a lean system to all employees and providing a sense of purpose and pride for departments. Companies can use metrics as a basis for issuing bonus payments, and this encourages employees to be mindful of waste.
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References
- Photo Credit business colleagues preparing for business meeting image by Vladimir Melnik from Fotolia.com
