A common misunderstanding is that Lean is just about cost-cutting. As this article explains, cost-cutting is only a part of the big picture. Lean is a strategy for the continuous improvement of processes as well as a method of eliminating waste and maximising the value your business offers to customers. Underpinning Lean philosophy is the idea of ‘respect for people’ – the only asset in your business that grows with time, and whose engagement is essential for prosperity.
The 5 Principles of Lean, below, provides the whole picture of how this philosophy can transform your organization. As we shall see, cost savings most often occur not from direct intervention, but as a by-product of the implementation of the other principles.
1. Define Value
Defining value – what your customer is willing to pay for – is the first step in looking at your company’s business. What do your customers find valuable? They can be quantitative things, like quality, speed of delivery and cost. Or, they can be qualitative things like innovation, and paying attention to them as customers.
2. Map The Value Stream
“Mapping the value stream” creates a visualization of the product flow in your business, to determine the work performed that the customer is willing to pay for. It reveals the activities that are necessary for delivering value through the workflow. Activities that do not deliver value to the customer are regarded as waste.
However, a deeper look is then needed, to establish whether the step is non value-adding and necessary, or non value-adding and not necessary. Unnecessary steps should be eliminated as pure waste, and the employees involved reassigned.
For instance, in package printing, the customer is not paying for internal quality checks, such as proofing or inline colour measurement. However, these are necessary because, if not checks are performed, the customer is less likely to pay for the product.
Similarly, the customer is not paying for the painstaking effort to manually mix colours before production starts. This is unnecessary because there are cheaper, faster and more reliable ways of doing this.
Value stream mapping is effective for revealing the symptoms of waste, and obstacles that prevent products from flowing smoothly through the business. The results can be astonishing: studies have shown that
95% of steps in pre-Lean businesses do not add value.
Tackling this provides great potential for improving performance and customer satisfaction!
3. Create Flow
When the non value-adding and unnecessary steps are removed, and the value-adding steps made more efficient, then looking how all the parts fit together is the next step. This is the opportunity to streamline your operation, and resolve pressure points and bottle-necks, minimising delays and interruptions.
Ways of creating smooth flow can include redesigning production steps and training the workforce with a wider range of skills. An example is introducing an ink dispenser and spectrophotometer in the ink kitchen, that all operators can use. Improved morale results, from enabling employees to focus on value-added tasks: ‘Respect for People’ in practice.
4. Establish a ‘Pull’ System
Most of you know that “pull” is the demand created by customers, and “push” is a company’s efforts to sell. Both are needed, but aspects of “pull” have highlighted the importance – and benefits of – just-in-time manufacturing and delivery, and the reduction of stock holding. While the recent disruption has forced an adjustment to matters of stock holding and long, easily interrupted, supply chains, the basic structure and value stream promoted by Lean principles have not changed. Ensuring adequate sources of materials and monitoring the amount of work in progress is part of ensuring the efficient effect of pull. The simple maxim here is, “If it isn’t moving, it isn’t earning money.”
5. Pursue Perfection
Lean and perfection are goals that are never reached. However, objectives along the way can be met through the adoption of the above principles and remembering that everything can be done better. Embracing the Lean culture of continuous improvement and respect for people is at the heart of the transformation companies can enjoy.
Also known by the Japanese term kaizen, continuous improvement is the ongoing effort to improve products, services, or processes1. The goal can be incremental changes, or a ‘breakthrough’ moment, where improvements happen all at once. Processes need constant evaluation so that improvements can be made in terms of efficiency, effectiveness and flexibility.
Importantly, continuous improvement is a team effort. In fact, success in this area is best achieved by setting up cross-functional improvement teams. Additionally, a culture has to be created where making mistakes is not a matter of shame and blame, but an opportunity to learn and improve. Moving from a culture of fear to a culture of learning is arguably essential for improvement to take place.
The Lean culture involves all stakeholders and every employee is a key part of success.
In the next entry of this series we look more deeply at identifying and beating “The Eight Wastes” in the package printer’s workflow.
NOTE: 1) See the Wikipedia entry: Continual improvement process
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