Lean Thinking is the title of a book by James J. Womack and Daniel T. Jones. While there is little in the book that is new, the authors have presented the concepts of lean manufacturing in a compelling way. The ideas of lean manufacturing are based within the Toyota Production System approach to the elimination of waste in every aspect of a company’s operation.
There are five basic principles of lean thinking highlighted by Womack and Jones.
Every company needs to understand what value the customer places upon their products and services. It is this value that determines how much money the customer is willing to pay for the product and services. This leads to a top-down target costing approach that has been used by Toyota and others for many years. Target costing focuses on what the customer is willing to pay for certain products, features, and services. From this the required cost of these products and services can be determined. It is the company’s job to eliminate waste and cost from the business processes so that the customers price can be achieved at great profit to the company.
2. The Value Stream
The value stream is the entire flow of a product’s life-cycle from the origin of the raw materials used to make the product through to the customer’s cost of using and ultimately disposing of the product. Only by a study and clear understanding of the value stream and its value-add and waste can a company truly understand the waste associated with the manufacture and delivery of a product and/or service. Lean thinking advocates supplier and customer partnership and radical supply chain management to eliminate waste from the entire value stream.
One very significant key to the elimination of waste is flow. If the value chain stops moving forward for any reason, then waste will be occurring. The trick is to create a value-stream where the product (or its raw materials, components, sub-assemblies) never stop in the production process. Where each aspect of production and delivery is fully synchronized with the other elements. Carefully designed flow across the entire value chain will tend to minimize waste and increase value to the customer.
The way to ensure that nothing is made ahead of time and builds up work-in-process inventory that stops the synchronized flow is to use a pull approach. A traditional western manufacturer will use an MRPII or ERP style of production planning and control whereby production is "pushed" through the factory based upon a forecast and a schedule. A pull approach states that we do not make anything until the customer orders it. To achieve this requires great flexibility and very short cycle times of design, production, and delivery of the products and services. It also requires a mechanism for informing each step in the value chain what is required of them today, based upon meeting the customer’s needs.
A lean manufacturer sets his/her targets for perfection. The idea of total quality management is to systematically and continuously remove the root causes of poor quality from the production processes so that the plant and its products are moving towards perfection. This relentless pursuit of the perfect is key attitude of an organization that is "going for lean".