Lean Enterprise Institute defines ‘lean thinking’ as ‘a way of thinking about creating needed value with fewer resources and less waste.’ It’s a practice which many businesses utilise to get the best value for their time, money, and effort at work. The end goal is to achieve perfect value with zero waste.
While a perfect resource to waste ratio is difficult to achieve and even harder to maintain, it’s an important policy in running a business. Once companies learn how to incorporate it, lean thinking leads to several benefits, most of which contribute towards their longevity. It starts with defining the key principles.
What Are The 5 Principles of Lean Thinking?
These five principles link and flow into each other naturally. It’s crucial to follow all five steps to utilise the lean concept to its full potential.
With the help of their customers’ feedback, businesses must determine the value of their products or services. This can be gleaned from qualitative data included in surveys, a quantitative analysis performed on sales figures, or both combined. Value in this context can be defined by how much and often a customer is willing to pay to gain a product’s unique usage.
Mapping the Value Stream
This involves identifying all the activities that contribute towards creating the customers’ values. Any activity that doesn’t contribute towards value is considered waste and discarded. For example, customers enjoy a particular drink at a coffee shop due to its unique flavour. Therefore, all activities that contribute towards creating this flavour are retained, while activities contributing to a less popular flavour may be scrapped.
After mapping value streams and removing waste, the existing workflows are refined to run smoother. This can involve strengthening the production process by purchasing faster machines or retraining the current employees. Business owners may also look into alternate production methods that are faster or involve less manual labour.
A pull-based system involves taking stock of inventory and utilising the available materials to produce the required amount of products. Keeping the previous coffee shop example in mind, the employees need to use the exact amount of ingredients in stock to make the predetermined number of flavoured drinks demanded by their customers. There shouldn’t be any room for wastage of stock or finished product.
Absolute perfection isn’t always entirely possible. However, it should be a goal for all employees in a business to pursue. The pursuit itself will result in measures being taken to improve work processes and environments. In turn, the improvements will lead to better products and services overall.
After incorporating these five principles into their work, businesses can expect to see several great returns on their investment.
9 Benefits of Lean Thinking
Lean thinking involves making the most of available resources. Hence, most of its benefits are linked to its accessibility to business owners and their teams.
The first step in lean thinking is to identify customer values. This ensures that customers are at the focal point. All ensuing decisions are made according to their preferences, which guarantees their happiness. A happy customer is also a loyal customer, whose patronage a business will benefit from. EWOR has already published an in-depth article on how you can make the best of customer experience innovation.
Lean thinking focuses on how to make the business function better. By zeroing in on problem areas and improving them, each work process flows smoother. It also brings previously hidden flaws in the system to light. Then the business owner can either resolve or remove these flaws.
Removing unnecessary work processes and improving inefficient ones reduce production times. The time saved can be used for planning or producing more output. Alternatively, both the business owner and their employees can enjoy the extra time for their personal leisure.
Better Product Quality
Improving work processes will lead to improved products and services. Customers will appreciate the rise in quality and associate it with the company’s brand. As the brand’s reputation improves, it will attract new customers alongside retaining the loyal customer-base.
Perfect Order Rate
This is achieved when all a business’s orders are delivered without any harmful incidents. Since lean thinking would remove ineffective delivery methods, the products reach customers in perfect condition. This, of course, increases customer satisfaction and ensures brand loyalty.
Once the work process is trimmed down, there will be fewer costs incurred in the company’s daily running. Lower costs lead to higher profits and, thus, a higher take-home salary. The extra savings can also be invested in business expansion. This can include increasing its presence in various locations or hiring more staff.
Zero wastage naturally makes a business more sustainable. Hence, lean thinking is less harmful to the local environment. Cultivating an image as a sustainable brand also boosts a company’s reputation. It not only attracts customers, but also prospective employees and investors.
As narrowing down work processes include upskilling staff, it results in a multi-skilled workforce. Aside from benefiting the business, the employees themselves can utilise these skills in other areas of their lives. They can even carry forward this skill set into a different career path.
Employees have a clear focus on what the company’s targets are and how they can achieve them. This feeds into a strong sense of purpose and passion for their work. The overall improvement in morale uplifts the company as a whole.
Lean thinking is a greatly beneficial business practice that facilitates continuous improvement. After committing to the five principles, companies must monitor each step to note how each change affects the business. Alongside reduced waste, they can expect significant improvements in the overall workflow and employee morale. From then onwards, the company gains a better reputation.