Lean Management in Less Than a Page.

I think it is a false distinction to say that people or processes are more or less important. Lean management is not set of methods. It is a very different way to think about the value your company creates for your customers.

I put this diagram together several years ago and I have found it to be a simple and useful expression of lean linking and management. I will give a quick and simple explanation of lean.

 

The starting point for all lean management is a deep understanding of how we can create huge amounts of value for the customers. LEAN IS CUSTOMER FOCUSED.

A big difference with successful lean companies is that they organize around value streams – not departments. A value stream is all the people and processes needed to serve the customers – organized as a continuous flow from the customers’ needs, product design/configuration, manufacturing (or services), through to delivery to the customers and collecting the cash. Traditional companies organize by vertical departments. Lean companies organize into a few end-to-end HORIZONTAL VALUE STREAMS.

In order to provide huge customer value and make tons of money, the business processes from sales through to cash collection must flow without stopping. Lean organizations do not make huge quantities of products so as to achieve “economies of scale”. They make products or provide services when the CUSTOMER NEEDS THEM. “Over production” – making more than the customers’ immediate needs – is anathema to lean.

Connected to flow management is the “pull system”. Traditional companies try to maximize the work by scheduling the manufacture or service products based on forecasts (or wishful thinking) of demand. This is a PUSH system based on forecasts. Lean companies only manufacture or provide services when the customers PULL products from the company. Making before true demand is called “over-production”. It is better to STOP producing than to make (or provide) without immediate customer demand. JUST-IN-TIME CUSTOMER PULL.

Lean companies recognize that there job is not only to design, make, and sell their products, but to be improving the business every day and every week. Improvement is not driven by big projects, but by 100’s or 1000’s of small on-going improvements throughout every aspect of the business. This “continuous improvement” is probably the most difficult aspect of lean thinking. It requires the entire company from executives to the least paid employees. As well as providing products and services, lean companies systematically make hundreds of small changes, leading (over time) to radical improvement of products & services, leading to high sales revenues, constantly lower costs, and huge profitability and investment. PEOPLE ARE YOUR BIGGEST ASSETS is not a facile slogan; it is a reality of lean.

Lean companies genuinely recognize that their people are their biggest assets. Lean companies train, nurture, and support the working people throughout the organization. The company’s “pursuit of perfection” is fueled by empowered people who not only serve the customer but also continuously improve products, services, service, that lead to greatly superior customer satisfaction. MAKE EVERY PROCESS BETTER EVERY DAY.

There is no “magic” related to lean. It is a focused endeavor to design the best products, provide the best products & services, serve the customers passionately, and make tons of money.