Lean Management explained
The basics of lean management
Lean management and its importance
The value mentioned above should be created by optimising resources and at the same time lead to an increase in added value. In practice, new ways are constantly being sought to create as much value as possible with as little waste as possible, for example in the form of resources such as people. When we talk about value, we mean the value of the product. This value is defined by the customer and is reflected in the marketplace, for example, in terms of sales price or competitiveness.
Lean management is a method for creating an efficient and customer-focused organisation that is constantly improving by optimising resources and continuously solving problems. The main objective is to maximise customer value and create a stable workflow that meets customer requirements by involving all employees in continuous improvement processes.
Lean management was originally developed by the Japanese car manufacturer Toyota. Toyota wanted to focus more on the workplace itself. However, it was not until 1988 that the term was first used by John Krafcik, who popularised the principle, setting the stage for agile methods such as Kanban and Scrum.
The five principles
This point is about identifying the value of the product. Identification should be a joint activity of the team so that everyone is on the same page.
There are two types of value:
- Value to the customer: These are all activities that add value.
- Total value to the company: The team ensures that the whole company delivers a value-added product to the customer, e.g. training of team members in a particular area by members of the quality assurance team. This is a necessary activity without value. It has no direct value to the customer, but is necessary to support the value-adding activities.
Value stream mapping can be used for analysis and visualisation. It involves analysing the current state in order to gradually adjust it to the improved target state. All resources involved in the process must be recorded, e.g. materials from the supplier to the company to the project. The analysis shows which processes add value and which do not. In the third step, the non-value-adding activities can be eliminated, i.e. the workflow can be improved.
A Kanban board is also a good visualisation tool. It consists of three columns: To-Do, Work in Progress and Done. The board shows who is working on what and where bottlenecks may occur.
Creating a workflow
As the workflow should run as smoothly as possible in order to reduce waste, it is important to eliminate bottlenecks and activities without added value that have been identified by the value stream analysis. This is because performing non-value added activities or wasting time due to bottlenecks can affect the workflow.
Value stream mapping achieves an approximation of the target state by removing wasteful steps from the project plan. Milestones, or small interim goals, can be set for each phase of the project to prevent waste from recurring. This ensures that you stay on track towards the target state.
However, the Kanban board can also ensure that there is no more major waste due to bottlenecks. If there are too many bottlenecks, a work in progress limit can easily be set to prevent too many tasks being processed at the same time, which can slow down the workflow.
The advantage of working with a pull system is that work is only started when it is needed. On the one hand, this reduces the risk of bottlenecks and, on the other hand, only activities that do not cause waste are carried out.
In addition, the system helps to adapt quickly to changes, make optimum use of the team's capacities, minimise wasted resources and improve the workflow. However, it is important that the individual tasks are prioritised and not selected at random.
Continuous improvement is about optimising the process. This can be achieved by focusing on improving the activities that deliver the most value to the customer while reducing wasteful activities.
In this context, it is worth mentioning that there are different types of waste: Muda, Mura and Muri.
Muda comprises a total of 7 process wastes, which include, for example, waiting times. Unnecessary waiting times disrupt the workflow and can lead to delays, which can have an impact on the project duration, but also on the project costs.
Mura is the waste caused by inconsistency in the process, which can also lead to a lack of a consistent workflow.
And Muri is waste due to overload. This mainly occurs in companies that do not use a pull system, as multitasking can occur here.
No matter what the waste is, it cannot all be avoided. However, continuous work can be done to minimise the negative effects in order to achieve continuous improvement.
The successful integration of lean management and the 5 basic principles requires a thorough understanding of the theory and a careful search for effective ways to adapt the project. This is not easy, but there are some options that can be considered during implementation.
Challenges and common mistakes during implementation
Lean is about leading together. This means that management does not make top-down decisions. In this case, senior management would have full control and decision-making power at all levels, information sharing is rarely encouraged, feedback loops and continuous improvement are hardly possible.
However, this partly contradicts the principles of lean management. This is because it is important for managers to support the team in achieving common goals, which means that they are part of the team. This leads to a high level of transparency, i.e. the transfer of knowledge and information to all those involved, and the sharing of tasks and responsibilities. To a certain extent, decisions can be made independently. This motivates the team to deliver high value in a short period of time while improving their own skills. Especially at the beginning it is important to remind the team of their own leadership skills and to encourage them.
It is important that the team understands what value is to be created for the customer. Since the aim is to create as much value as possible with as little waste as possible, the team also needs to understand what waste is in order to look for improvement opportunities that will increase value. As mentioned earlier, it is useful to carry out the value analysis with the whole team.
Keeping an eye on flow
The aim here is to ensure that the project does not grind to a halt. To do this, everyone in the team needs to know who is working on which task. The Kanban board mentioned above is ideal for this. This way, everyone knows who is working on what and whether anyone has free capacity.
However, there must also be enough flexibility to be able to solve any unexpected problems that might disrupt the process. It is therefore important to work with the pull system, so that tasks are only started when there is free capacity. If a team member is absent for a day, another team member can take over the work as soon as capacity is available and the workflow is not disrupted.
Lean management in various industries
In healthcare, the aim is to reduce waste in order to focus on processes that add value for patients, reduce costs or significantly reduce waiting times. But storage is also wasteful because it ties up costs and takes up space that could be used for other purposes. The Virginia Mason Institute implemented a Patient Safety Alert System that allows staff to report potential patient safety issues immediately. Within 10 years, complaints fell by 74 %, resulting in significant cost savings. Waste was identified and action taken to reduce it. In this way, a value-adding activity was created.
In the construction industry, for example, this can relate to planning and organisation. Each step in the process is analysed to determine what needs to be improved to ensure a smooth process. This applies to both materials and working time. The principles of lean management can be used to identify and reduce delays so that costs do not increase and sufficient profit is made.
Many areas of software development can also benefit from lean management. Waste can occur when a feature is developed that is not needed in the market. The same applies to reworking a feature that has already been developed. In this case, it would be important to carry out a thorough analysis of the value of the investment beforehand. Such delays can result in additional costs or the need to disband a team because time has been misallocated and the team members are needed elsewhere.