Lean Introduction

To show how Lean will benefit business operations, it is useful to define what lean is, the history of lean, the principles and describe common tools and practices that a company would use to implement Lean. By defining Lean, we can extract the benefits that a company would hope to obtain by implementing the discipline.

Lean is an ideology that represents the removal of waste directly and indirectly to provide greater customer value for the same level of effort (Protzman, Whiton & Protzman, 2018). It places the customer value at the top of the list of importance and allows the organisation to identify a need or a problem, test a potential solution, check the results and embed this solution across other areas of the business. The Deming's wheel as shown in diagram one was the result of Edward Deming introducing a scientific method of upgrading systems to the Japanese in the 1950s (Deming, n.d.). The idea is; Lean at the core is about removing waste and then systematise methods for continuous trial and error (Brits, 2018).

Lean History

Evidence of production processes have dated back to 1450s Venice, however, the first documented integrated system only arrived in 1913 with Henry Ford (Zarbo, Copeland, & Varne, n.d.). Ford’s breakthroughs in the process allowed his company to have a competitive advantage through operational excellence (Brits, 2018).

Henry Ford created a system that allowed his workers to work in sequence with each other and yet at the same time, create go, no go criteria for each part, ensuring the quality of the part. The production line would be revolutionised from this moment on; where generalists who could manufacture many parts or even the whole product, were being replaced by specialists who were alienated from the end product and customer (Trot, 2017).

Operational excellence ensures lower prices to the consumer over time (Levin, 2013), however, it can lack customer collaboration and variation of product (Johnson, 2015). Henry Ford had only one model, one colour of the Model T and in his own words told the customer what they needed; “Any customer can have a car painted any color that he wants so long as it is black" (Ford, 1863-1947).

Over time, customers demanded more variation, Fords large manufacturing cycle times, may have had lower costs and increased throughput (Wilson, 2014), but it allows new competitors into the market as customer demands differ. Kiichiro Toyoda and others in Japan studied Fords system in the early 1920s and realized that with some simple tweaks, they could have efficient system flow with the additional of benefit of different product offerings. This method would go on to be called the Toyota Production System (TPS) from 1948 onwards (Gardiner, 2013).

Toyota shifted the mindset from individual machines set up for a single purpose to the flow of the product through the entire system.  With each step being self-checking for quality and allowing the next step to pull from the previous step based on demand, which in turn created demand up the line, Toyota was able to ensure limited waste in the end to end cycle and yet allow the customer to demand their choice of vehicle.  The term "lean" was a brand created to describe Toyota's manufacturing model by Jim Womack, Ph.D., at MIT's International Motor Vehicle Program in the early 80’s (Krafcik, 1988).

Lean Principles

The lean way of thinking has provided a set of principles for organisations to start visualising the reduction in waste.  Step one is about identifying customer value, ensuring the organisation is still putting the customer as the reason for change. Step two allows the organisation to map the value stream, the process map or the manufacturing system. Step three identifies waste in the process and the removal of waste realizes better flow. Step four introduces the technique of ‘on demand pull’ as opposed to ‘push’, where by one part of the step should pull from the previous step to ensure less inventory, stock, data or people are being produced than they need to be. Continuous improvement towards perfection is the last step, known as KAIZEN, step five; this step is about realizing that you will never actually be at a perfect solution and that you will need to continuously identify more value for the customer and refine.

Part of the core meaning behind Lean is the removal of waste; Muda was a key concept in the TPS and Taiichi Ohno identifies seven forms of waste (Muda) that helped TPS create a competitive advantage.

The TPS also identified additional forms of waste like Mura; waste due to variation and Muri, waste due to overburdening or stressing the people, equipment or system (Gemba Kaizen versus Muda, Mura, Muri, 2012).

Mura allows organisations to only produce variation for what the customer demands and not for variation sake. More variation causes higher inventories, less value to the customer and therefore more Muda.

Muri has tried to be branded as the eighth waste (Gibbons, Kennedy, Burgess, & Patrick Godfrey, 2012), however, this is was not it’s original purpose. The idea of not overworking people and equipment, ensures that you have less downtime with sickness and broken machines due to working them through natural limits (Liker, 2004).

Although Lean is an ideology for removing waste, structured methodologies and tools have appeared over the last forty years to help companies adopt lean.

Kanban is a system that toyota used that originated with the Japanese bath houses, Kanban meaning signal card, this system allows only a limited number of spaces or cards to be used in a given space and time. It leverages the idea of pull, ensuring the product is pulled based on demand and areas of the system are not overworked (Gardiner, 2013).

Lean six sigma is another tool that blended the principles of lean with a data driven improvement methodology six-sigma. Lean will reduce waste and Six sigma will focus on removing variation, however, this could be argued that Six Sigma is merely Muri and thus a duplication of the original TPS.

In a world that is changing faster each year, small interactions of change, driven by customer demand allows for faster customer feedback, faster time to market and fewer costs (Ries, 2011).

Start-up companies are now realizing that Lean isn’t just for manufacturing companies looking to cut costs, it is a viable way of testing your theory before committing time and money that may not deliver a return (Blank, 2013). Technology departments who may have bias towards other branded ideologies, have found project startups leveraging Lean are ensuring a fast fail mentality and therefore not over capitalising at the start; once benefits are validated, the project may continue (Application of the Lean Startup Methodology in Project Management at Launching New Innovative Products, 2018)

Although the seven forms of waste promote greater efficiencies and therefore reducing costs, by streamlining your processes (Jensen, 2014, Gardiner, 2013); an organisation also gains greater throughput to meet demand, reduced cycle times ensuring a customer can get a product faster and less risk of variations in quality.