This article explains the philosophy of LEAN management in a practical way. After reading you will understand the basics of this powerful quality management tool.
What is LEAN management?
LEAN management originates from the Japanese car manufacturer Toyota. LEAN manufacturing literally means lean production. Toyota plays close attention to the proportional relationship between high production and high-quality at low costs, which leads towards an improvement of the operating results.
LEAN management is sometimes referred to as the Toyota Production System (TPS). This philosophy targets the prevention and elimination of Muda, the Japanese expression for waste. All that is Muda does not deliver added value.
LEAN management: three times “Mu”
There are three main categories within LEAN that all start with “Mu”:
Irregularity in demand – over utilization of production and stock because of a bad balancing of (customer) demand.
Irregularity in the process – over utilization in production because of a bad synchronization in the dimensions of production resources.
Waste – all activities that do not add value for the customer.
In LEAN management eight different types of waste are distinguished in the Muda section: defects, over production, transportation, waiting, inventory, motion and movements, over processing, unused creativity and capacity.
LEAN management advantages
One big advantage of the LEAN management is the relationship between cost saving and improvement of productivity and quality. In LEAN management, all energy and creativity within an organization are geared towards optimizing the aspects that are valuable for the customer.
This includes among other things, price, quality, delivery time, maintenance costs and environmental tax. In addition, it appears that internal factors such as safety, occupational hygiene and ergonomics often improve as well.
LEAN management principles
In addition to having advantages the LEAN management has a number of characteristic features and principles:
- level hierarchy
- more responsibility and competence at the basis of an organization
- discouraging and eliminating of losses
- improved communication with customers and suppliers
- focus on that which is important
- improved customer friendliness
Because an organization fully aims at improving the existing product with LEAN management, the opportunities for discovering innovative, new techniques decrease. In addition, the introduction of a successful system requires far-reaching preparations, whereas the results are not immediately noticeable in the short term.
Moreover it is often underestimated that changing over from short-term thinking to long-term interest rates requires much time and effort for employees.
This management method is often wrongly considered to be a Japanese method. LEAN management is largely based on British and American principles (Henry Ford and W. Edwards Deming) which were spread and introduced in Japan through American reconstruction work after the Second World War.
By applying TPS, Toyota succeeded in reducing cost and thus became one of the top ten of multinational corporations. TPS is considered to be the classic example of the ‘Kaizen’ approach that is aimed at production improvement.
In LEAN management many established methods are used. All these methods have in common that they aim at identifying problems, eliminating unnecessary steps, combining several steps into one step and the solving and preventing of problems.
LEAN management is sometimes symbolically represented as a house, based on a solid foundation and built up from all these established methods.
The base of LEAN management is formed by a multifunctional team that pre-assesses the used materials and the process. This team consists of several employees from different departments, from production and research to accountants.
They have the task to pre calculate the costs of all steps so that it becomes clear where e profits may be gained. In their assessment decisions are considered about make-or-buy or re-engineering.
Toyota especially uses this method fully, because of which Toyota has built up a lead in cost control compared to their competitors. Besides Toyota, several other multinational companies use the LEAN method successfully: for example General Motors, Scania and Volkswagen. Moreover, more and more large (manufacturing) companies switch over to LEAN management.
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- Myerson, P. (2012). Lean supply chain and logistics management. McGraw-Hill.
- Salah, S., Rahim, A., & Carretero, J. A. (2010). The integration of Six Sigma and lean management. International Journal of Lean Six Sigma, 1(3), 249-274.
- Womack, J. (2011). GEMBA walk. Lean Enterprise Institute, USA.
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