How can you use lean management principles to improve cost management and innovation?

Lean management offers a double win for airlines. By focusing on eliminating wasteful processes and empowering employees to identify areas for improvement (like reducing unnecessary inventory or streamlining maintenance), costs shrink. Simultaneously, this focus on efficiency frees up resources for innovation. Empowered employees can brainstorm new ideas to improve the customer experience, like faster baggage claim or user-friendly booking systems. Lean principles tighten costs while creating a breeding ground for innovation.

Cost exists to be reduced. Not Analysed. So said the great Taiichi Ohno Let us take an example. We had a Superfinishing machine, which used polishing paper and used to be imported apart from being expensive. It so happened that there was massive shortage and this forced me to develop a solution to tide over the crisis situation. A good colleague Santosh Thopte and me, did a Kaizen or experiments to this effect. We measured all the quality parameters in the existing situation and then reduced it by 25 mm and so on till there was a change in result. Like for instance we started from 300 mm and went on till 150 mm consumption per piece and then stabilised at that value. Cost reduction was 50%. From 8€ to 4€ per piece.

Primary source of new, improved or distinct feature of product is customer and market. Lean initiative establish internal need of a change primarily focusing on wastage and cost reduction targets and also offer some useful tips and direction. So im my opinion, lean in itself does not persue innovation and differentiation.

While lean practices like Value Stream mapping, identifying value and non-value adding activities do help in incremental improvement, Airlines have a huge opportunity today in front of them to completely re-imagine processes by leveraging GenerativeAI. Processes related to Customer Service, PNR management, aircraft maintenance, marketing, loyalty can leverage GenAI to do things differently. E.g. Many airlines today run Refunds and Exchanges CoEs where 100s of agents process transactions by following multi step SOPs. Instead of leveraging value stream mapping and improving this process to be 20% or even 50% more efficient, the real opportunity exists in eliminating the process itself by automating it 100% so that self service can happen.

You practice all these lean tools, all are OK. Complexity starts when multiple products are passing through common resources. You face tough dilemma here and despite implementing meticulous lean principles, you sacrifice your profits. Lean must start from marketing itself with transparent communication channel between all departments. Main blockage is the information compartmentalization. Your Order selection plays a vital. With compartmentalized information flow and isolation of Sales & marketing from lean initiatives, you land up processing orders which actually curtail your margins or become a standalone loss-making orders. Try identifying the constraint process station and work backward. It will be an eye opening for many of us.