Lean Management encompasses a set of principles and processes that help an organization to create greater value for its customers in a lesser time frame by using limited resources and minimizing waste. It is a great philosophy to implement in any organization irrespective of its size or type. These practices also help in innovation that is very crucial for today's business climate.
There are five Principles of Lean Management:
Specify Value: Lean Management lays a lot of emphasis on value and its maximization. It's important to identify and specify what constitutes this value to the customer so that your employees are clear about it too. Thereby, you can recognize the wasteful activities and processes which then can be minimized by your team.
Identify the Value chain: Value chain or stream is a set of activities through the organization that work on the product from the raw material stage to the finished good for the customer. Mapping and identifying each process in a chain helps in figuring out the logical order, wasteful processes and in streamlining operations to deliver greatest value in the least amount of time.
Create Flow of value: Typically only 5 % of activities for a product and 50% of activities for a service add value. This waste, if removed, creates a flow that ensures that the product or service smoothly reaches the customer without delays, defects, and waiting.
Respond to Customer Demand: An organization's production and inventory process must be closely aligned with customer demand. Remember that cost of storing and transportation are idle costs and do not add value to the product for the customer. Thus, understanding customer demand patterns better can help in improved production scheduling that can eliminate the huge wastage in terms of cost for storing excess products. Aim at producing what the customers wants when they want.
Aim for perfection: As you define and establish value flow, wasteful processes will begin getting eliminated. Customer pull will be better addressed. All this will create a reorganization of processes across the organization, whereby, more wasteful processes will become visible and the pursuit of perfection will be attainable. The end goal is always about adding value to the customer.
These 5 principles of lean management will help you bring about change, minimize wastage and implement policies that emphasize the right way of doing things in the organization. Processes will get streamlined in the endeavor to consistently deliver value to the end customer. Organizations that constantly monitor are able to handle any changes in business environments better and more efficiently.