A lot of companies talk about the benefits of Lean Management. But what do they mean by it? Too many companies focus on sales and marketing without thinking about how they can improve their processes and eliminate waste. It’s not enough to just add more people to your team. You need to rethink every process in your business with an eye toward eliminating waste. What you’re left with is Lean management – a fundamental of which includes a focus on a strong lean culture.
In this article, we explain what Lean Management is and why every business needs a strong Lean Culture.
In today’s business environment, Lean Management has emerged as the most efficient and effective way to improve the performance and quality of an organisation. Lean Principles help managers to :
- Streamline operations
- Reduce waste
- Increase productivity
- Provide better customer service
- Protect the environment
- Increase profitability
The concept of Lean focuses on improving the speed, quality, reliability, accountability, and flexibility of a company’s processes. Lean management also involves building a culture of competence. As a result, this ensures that the techniques are implemented properly, and that people feel ownership of the solutions that result from these Lean principles.
What is Lean Management?
For many people, Lean seems like another buzzword or management trend. It’s not. It’s about culture. It’s about principle. At its core, Lean is about maximising your resources by eliminating waste and increasing value. To do that well, you need to build a strong culture focused on continuous improvement and change through collaboration. The result? A lean business that consistently makes more money than it spends with fewer resources than competitors who aren’t leveraging these principles.
If you’re looking for an edge in today’s competitive business environment, then consider investing in a lean business system. Doing so can provide all of your stakeholders with dramatic gains in revenue generation, employee satisfaction and retention as well as customer loyalty. Those results will all lead to growth that empowers companies from start-ups to large enterprises alike.
5 Principles of Lean
Achieving Lean business process improvements may seem like an impossible task at first. But by understanding the principles of Lean, you’ll be able to create meaningful, immediate changes that lead to long-term improvement. With these concepts in mind, businesses are able to streamline their operations, saving both time and money. Whether you want to bring quality products to market faster or simply make your company more efficient, these principles are the perfect way to get started with Lean methodologies.
At first glance, these principles seem pretty basic and even self-explanatory. And that’s a good thing. A lot of companies spend a great deal of time debating very complicated solutions without first asking some fundamental questions about why they want to make improvements in their processes in the first place.
In order to truly engage in something as impactful as Lean business process improvements, it is crucial that you understand your motivations as well as what you hope to achieve by adopting these principles in your company. Once you figure this out, it will be much easier for you and your team members to follow through on these important concepts on a day-to-day basis.
Here’s what you need to know about the 5 Principles of Lean Business and how they will help your company succeed in today’s challenging economy.
Principle 1 – Focus on Value
You’ll increase your profits by focusing on what matters most to your customers. What specific benefits does your product or service deliver? Does it help them achieve a goal, solve a problem, or make life easier? Identify those tangible results as your focus. This will provide you with some clarity as to how you should run your business from day-to-day, allowing you to decide where to put effort, spend money, and hire people. Focusing on value is where Lean principles begin.
Principle 2 – Value Stream
A quote from Edward Deming: “If you can’t describe what you are doing as a process, you don’t know what you are doing”.
In a value stream map, you take a snapshot of your business from start to finish. Mapping the processes will confirm whether your organisation can meet the demand for your product or services, any process steps that may be a constraint and highlight opportunities to remove waste, improve lead-times and enhance the customer experience. In addition, there may be a number of value streams in your organisation to deliver products or services to your customers.
Principle 3 – Flow
There is a natural ebb and flow to business, which you can leverage for increased profits. To achieve an optimal level of flow, produce only as much as your customer needs, build only what your customer orders, and move goods just as quickly as possible through your operations. The more flexibility you give your Operations team to respond to market changes, the smoother things will run—and, consequently, more profits you’ll see. Investing in lean equipment that reduces cycle times is one way to optimise throughput. It gives Operations teams the freedom they need to react quickly and efficiently when opportunities arise.
Principle 4 – Pull
In a Lean business, you don’t overproduce. You produce what you need, when you need it. This reduces costs because you aren’t producing things that go to waste. As a result, this allows your customers to get exactly what they want because no one is mass producing an array of items nobody wants. In addition, it increases customer satisfaction because customers know they will get exactly what they want at exactly the time that is convenient for them.
This is achieved by replacing a ‘push’ approach with a ‘pull’ approach. Push simply takes the customer demand and loads it into the process. Some process steps and staff can be overwhelmed with the often erratic demand. A ‘pull’ system aims to match resources with demand and build ‘pull’ signals into the process to ensure a smooth flow and remove stress points from the organisation
Principle 5 – Perfection
Customer preferences will change, technology will improve and competition will innovate – all meaning that to stand still is to go backwards. A process is never perfected and there will always be opportunity to remove waste – commonly defined as anything that does not create value for customers. Waste should be your primary concern.
Some examples include items that do not work well, are unnecessarily complicated, or just take up space. Most people fail to realise just how much time is wasted on their jobs. Over time, these little wastes really add up! By eliminating these wastes you will have more time for valuable activities such as adding value to your products or services, finding new clients or increasing productivity within your team.
Waste comes in many forms, but a majority of it consists of unproductive time spent waiting for supplies or working in a department that is completely misaligned with the customer’s needs. Eliminating waste is a crucial component to operational improvement. Streamlining processes and reducing non-value added activities allows customer to get better value, in a shorter lead-time.
Do More with Less
Lean is not about reducing costs and cutting our way to success. Lean principles encourage improvements in every aspect of an organisation – operation, structures, propel and even the environment. The lean approach is about growing our businesses. By delivering quality products and services reliably and on-time, customers will want more and will refer our services to other clients.
A business that knows how to operate lean will have fewer headaches in its day-to-day operations. Not only will employees be happier with their jobs, but they will be empowered and quick decision making will take place at all levels of the organisation. Once you apply these 5 principles, you’ll see improvements in all areas of your company’s business, from production time to employee engagement to customer service. By knowing how to apply lean management techniques effectively, you can improve your business and increase profits.
Why do you need a strong Lean Culture?
A strong lean culture helps build trust among team members, which can strengthen communication channels. In addition, teams with strong communication channels feel free to question each other’s ideas. This level of communication makes it easier for leaders to stay on top of all that’s going on in your company and respond quickly if an issue arises.
Even small problems can turn into big ones fast without proactive leadership – having a positive lean culture is one way you can prevent them from happening in the first place. Team members who are encouraged to ask questions and challenge what they don’t understand or agree with also perform at higher levels because they no longer have to work in silos. When everyone understands their role in achieving company goals, they’re able to take more ownership over their responsibilities and make changes when needed.
In order to be successful in today’s business environment, Lean Leaders need to create an environment where employees can thrive. This requires business leaders to know and understand what it means to be a leader in a world of Lean thinking.
The leadership role is to ensure that employees have enough information to develop ideas to improve the customer experience or cut costs or waste out of the process. Shared performance and customer experience metrics should reflect the cumulative efforts of the team over time.
True Lean leadership fosters opportunities for creativity and improvement at every level in your organisation. That’s why every business needs a strong lean culture. If you’re looking to promote continuous improvement throughout your enterprise, there are some key practices that will put you on the right track:
Eliminate non-value-added activities
Non-value-added activity is anything that doesn’t contribute directly to building products or providing services. Eliminating waste should never lead to eliminating jobs. Our goal should be to grow the business and any waste resource eliminated should be invested in servicing our increase in demand.
Create visible metrics for performance
When people don’t know how well they’re performing, it creates all kinds of problems. To keep everyone focused on measurable results, create high-visibility metrics so everyone can see how well they’re doing their jobs. At successful Lean organisations, employees own the metrics and prioritise the actions required to address issues. Leadership need to support issues raised that are outside of the direct control of the team.
Benefits of a Strong Lean Culture
In theory, a lean culture can help your company achieve all your business objectives and more. In practice, it’s not easy to get there from here. The road from where most companies are today to where they want to be in five years or less looks like a series of mile-high mountain peaks. Instead of focusing on achieving one objective at a time, leaders need to start seeing their long-term vision as a series of smaller objectives that need to be achieved one step at a time—what some refer to as milestones.
A strong lean culture has three crucial components: employees, leadership and tools. If any one element is weak—be it leadership or an employee base without buy-in—the rest falls apart pretty quickly. And if you’re already running lean, but with poor team engagement and disengaged managers with no training or education budget for improvement, then you’re still leaving money on the table every day by letting those employees go untrained and under-utilised.
Overall, the key to the success is for leaders to be willing to take an honest self-assessment and examine their own company’s processes. By doing so, they will see if their organisation is ideal in its model, but also where improvements can be made. Lean management will also require leaders to have an open mind when it comes to changing and making changes within the company. Once these leaders commit to improving the model, the rest of the organisation will follow suit, and the benefits will be immense.
For most entrepreneurs, the goal of starting their own business is to grow it into something bigger, better, and more profitable. And while there are many strategies you can employ to ensure your business’s growth, the lean management strategy has proven time and again to be one of the most effective ways to do so.
With its focus on increasing efficiency and reducing waste, Lean Management helps you identify areas in your business that are costly or even holding you back from growth. So if you’re ready to unlock your business growth with this powerful strategy, you can schedule an online consultation with us on our website.
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