Understanding Lean Principles: Maximize Value, Minimize Waste

Posted on Feb 15, 2025 in Business Administration and Management (BAM)

Lean Principles: An Introduction

Lean: An approach to operations management that emphasizes the continual elimination of waste of all types. The core idea is to maximize customer value while minimizing waste, creating more value for customers with fewer resources. To accomplish this, lean thinking changes the focus of management from optimizing separate technologies, assets, and vertical departments to optimizing the flow of products and services through entire value streams that flow horizontally across technologies, assets, and departments to customers.

Core Lean Principles

  1. Pursue Customer-Centricity: Focus on delivering value from the customer’s perspective.
  2. Focus on Waste Elimination: Quality should be constantly improved by eliminating wastes and sources of waste. TQM and BPR are consistent with it, BUT Lean has a more emphasized view, and he designed peculiar tools (e.g. Kanban) and heuristics (e.g. the 5s)
  3. Perfection is the Goal: We should eliminate all wastes. TQM is consistent with Lean with the goal of zero defects BUT the “defects” addressed by TQM represent only one of the “7+3” wastes tackled by Lean.
  4. Include and Empower the Entire Organization: This principle is consistent with the “total engagement” promoted by TQM. In both cases, we must look at the interactions of forces within each process and between processes, and we must engage all layers of the organization.
  5. Generate Continuous and Synchronized Flows: TQM and BPR agree with it, BUT Lean has a more emphasized view and seeks to minimize interruptions in process flow.
  6. Adopt a “Pull” System: Lean argues that production should not be based on a forecast of customer demand (i.e. “push” system), but on a reaction to actual customer demand (i.e. “pull”). Pull systems can minimize, or eliminate, inventory. Lean introduced several tools and techniques (most noticeably: the kanban) to develop agile processes that can produce “Just-in-Time”.

Implementing Lean: A Continuous Improvement Process

The Lean principles are implemented in a process of continuous improvement:

  1. Understand Customer Needs: As with TQM and BPR, we must be careful to understand what the Customer wants.
  2. Identify and Map the Value Stream: Determine which processes generate value for the customer. Michael Porter’s Value Chain Model is one way to represent value streams (see Lecture 4). Lean is full of visual tools, e.g. value stream mapping, process maps, kanban, andon boards, etc.
  3. Redesign Processes for Continuous Flow: Redesign processes so that value flows continuously, and eliminate all the “unnecessary costs” attached with wastes.
  4. Establish a Just-in-Time System: Incorporate a pull system.
  5. Seek Perfection: Repeat this cycle over and over again.

Just-in-Time and Waste Elimination

The first pillar: Just-in-Time produce products and provide services when customer demand them, so they try to eliminate inventory as much as possible (elimination of waste).

The 3Ms Model of Waste

Type of Wastes: the 3Ms model: and Mura (imbalance when irregular), Muri (overburden) and Muda (represents the non-value adding activities).

Organizational Wastes

  • Poor talent management
  • Poor resource maintenance
  • By products

5S Heuristics (General Interventions)

  • Sort
  • Straighten
  • Shine
  • Standardize
  • Sustain

7 Process Wastes

  • Transport
  • Inventory
  • Motion: the physical movement of a person or machine whilst conducting an operation.
  • Waiting
  • Overproduction
  • Over-processing: conducting unnecessarily complicated operations.
  • Defects

Just-in-Time, Kanban, and Push vs. Pull Systems

Push systems are proactive systems, which use forecasts to anticipate before market demand. They are more quickly to customer demands, as they use inventories. In doing so, there is a risk of overproduction and other wastes, but response time is minimal.

Pull systems are instead reactive systems, which are slower, as they need to build the product from the beginning. They are aware of the costs and risks of inventories – hence, they try to minimize this waste by improving the quality of forecasts. (Example: high-quality tailor shop (hand-made clothes)

Lean focuses on the creation of a “smooth” process flow and the development of a pull control system. BUT realistically organisations tend to implement an hybrid system, with a primary pull system supported by secondary ”push” forecasts.

Lean is based on the idea that inventory is a waste (Just-in-Time) and he does the following to improve process performance:

  • Increase the capacity to react very quickly to customer demands, with the use of 5s, takt-time and chaku-chaku.
  • Make an intelligent use of the inventory: products are expensive to maintain, so we need to make the correct amount. Kanban is arguably the most popular tool.