LEAN MANAGEMENT

Lean is all about customer focus. Value is defined by the customer and the entity develops and maintains
processes to provide this value. Processes are run by people. The support, proper leadership and guidance
drive people to continuously improve the processes that add value to the customer. The management
system that helps to achieve this is a Lean Management system. Lean Management system uses various
tools to connect the purpose (providing value to customer) to the process and people. Some of the lean
management tools which are commonly used are Leader standard work, visual control boards, 5S, and
daily accountability.
ORIGIN
Lean was generally practiced with manufacturing industries but now it is being applied with equal
emphasis in service as well as administration processes. After World War II, the Japanese adopted
Henry Fords mass production principles. Local constraints compelled the Japanese to eliminate
excess within their organizations very quickly. Taichi Ohno made a contribution to these changes
when it developed the Toyota Production System, which is the production model everyone seeks to
emulate. It is not a tactic or a cost reduction program, but a way of thinking and acting for an entire
organization.
PRINCIPLES OF LEAN MANAGEMENT SYSTEM
Lean management is characterized by its drive toward achieving profitability and productivity through
continuous improvement and resource waste elimination. It is an organizational culture as well as specific
practices with clear goals. Thousands of organization worldwide have achieved tremendous productivity
and return on investments by implementing lean practices and techniques. Lean management is an
applied philosophy that many manufacturing, service and government organizations have adopted to
acquire the flexibility needed to meet new competitive challenges eliminating waste, enhancing
production speed and pushing innovation. The objective of the approach specifically called Lean is
to respond rapidly to changing client tastes and to offer the most value possible at mass production
costs. Lean management attempts to achieve three goals: flow, harmony, and synchronization. These
are applicable to all business sectors including service sectors. Achieving them consistently requires
a tremendous amount of creativity and experience. These are some of the main principles behind the
Lean approach. Lean Management System works on the following 5 principles:

1.
2.
3.
4.

Value - specify what creates value from the customers perspective.

The value stream identify all the steps along the process chain.
Flow - make the value process flow.
Pull - make only what is needed by the customer (short term response to the customers
rate of demand).
5. Perfection - strive for perfection by continually attempting to produce exactly what the
customer wants.
The lean management leads to the following benefits at all levels.

1. Company It ensures less waste which means low expenditure and investment. The
reduction of waste will ensure improved product quality, profitability and optimized
production.
2. Customers It ensures improved customer care services and efficient supply of goods
and services to clients.

3. Employees It ensures motivated employees due to the safe working environment that
the method avails to them.
Benefits and importance of Lean Management system
A good management system is needed for each and every manufacturing company for providing better
results. There are different types of management systems followed by the manufacturing companies. Lean
management system is one of the most advanced and popular management techniques, which many
companies are using in recent days. Many of the non manufacturing companies are also using these
techniques for better results. There are many advantages by using lean management instead of any other
management technique. There should be better improvement in the organization after using the lean
management system.
The lean management system is very useful for the companies which are facing problems, such as time
delay, manufacturing cost, not enough capacity of raw materials etc. While implementing the lean
management, guidelines of the system is to be followed.
After following the rules in the lean management system several benefits, such as better saving of the
guidance time, and the requirement of space to do the task is also reduced. The main advantage of this
lean management system is that the work which is under the execution is reduced. Lean management
system boosts the production level up to very high level. It gives a better idea about the loss and gain in
the company to all low level and high level workers, which is also useful for the company.
The lean management system also concentrates on customer satisfaction. The products are good and
delivered in time, so the company gets positive feedback from the customers. This feedback improves the
sales of the product. Leadership is another main feature of lean management system; this feature helps to
improve the profit of the company. If a good qualified professional managing the company, it gives you
better development to the company. It may improve the quality and the cost of the product.
The lean management system is very much effective in the situation, when a task is performed by group
of members. The lean management system is useful for both small scale and large scale industry.
WHY LEAN MANAGEMENT
Lean Management is applicable to all government organizations as well. Around the world, government
organizations from local law enforcement to national benefits administration have realized the benefits of
Lean Management a new approach. They have realized its benefits and started implementing within
their organization to streamline complex processes, offer better services to customers, shrinking wastes,
and to realize real improvements. Lean Management helps public sector/organizations streamline
processes by addressing the causes of organizational inefficiency, building the management systems and
capabilities to sustain new ways of working, and engaging managers and staff to make continuous
improvement a part of everyones day-to-day job.
Thats one reason lean management succeeds where other approaches fail: while experts and change
agents can kick-start the lean process, it is only when people in line organization feel fully accountable
and have learned the right capabilities that improvements are sustainable.
Lean management programs generally start with pilots to accelerate organizational learning and quickly
build a foundation for organization wide change. Teams diagnose problems in a small area, and then
design and implement solutions, refining them along the way so they can be scaled up to the larger
organization. Within 6 to 18 months, this approach can deliver genuine transformations: typical
improvements include better employee engagement and development and 15 to 30 percent rises in
personnel productivity; 30 to 50 percent higher quality and service-level adherence; and dramatically
faster turnaround times and more customer satisfaction.
Lean management also offers substantial risk-management benefits. When managers understand more
about the real needs of stakeholders and customers and eliminate non value- added activities,
organizations can deploy human and financial resources to the areas where they can make more of

difference. With rapid test-and-learn events, managers understand the implications of changes before
rolling them out across the organization and can make course corrections early and often. Standardizing
work increases the predictability of outcomes and captures best practices. Creating a culture of
transparency and constructive problem solving encourages staff to identify and mitigate risks and
inefficiencies.
In spite of all the above benefits, lean management in India is still in infancy and the Indian firms are far
away from enjoying its complete benefits. The awareness level in Indian context on lean manufacturing is
very low. The concept is largely adopted only by the big firms popularly known as Indian MNCs. One
such example is Tata Motors which has created a success story by launching Nano implementing lean
manufacturing. Lean philosophy helped to reduce the cost without compromising on size and comfort.
Recently many apparel firms have also opted for lean manufacturing owing to reduction in order-todelivery time from European importers. The implementation of lean philosophy demands a motivated and
trained work-force and committed top management. The competition is very tough and lean principles
can prove very beneficial not only to the Indian manufacturing firms but, also the organizations in service
sector like hospitals, academics, Government and State establishments etc. to compete globally. It will
help them to improve upon product & service quality and reduce the costs along with speeding up the
delivery. The organizations can make game-changing advances by improving a wide range of processes,
from hiring and procurement to customer services. Focusing on a single process can yield incremental
progress, but it often fails short of real and lasting transformation as Lean Management is a continuous
improvement process where it focuses on incremental improvement of products, processes, or services
over time, with the goal of reducing waste to improve workplace functionally, customer service, or
product performance.
Lean Management System considers the following 7 types of manufacturing wastes:

1.
2.
3.
4.
5.
6.
7.

Overproduction occurs when production should have stopped.

Waiting time periods of inactivity.
Transport unnecessary movement of materials.
Extra processing rework and reprocessing.
Inventory excess inventory not directly required for current orders.
Motion extra steps taken by employees due to inefficient layout
Defective goods dont conform to specifications or expectations.

And the following 7 types of service wastes:

1.
2.
3.
4.
1.
5.
6.
7.

Delay customers waiting for service.

Duplication having to re-enter data, repeat details etc.
Unnecessary movement - poor ergonomics in the service encounter.
Unclear communication having to seek clarification, confusion over use of
product/service.
Incorrect inventory out of stock.
Opportunity lost to retain or win customers.
Errors in the transaction, lost/damaged goods.

JIT and TQM are the two fundamental pillars of a lean management system. Production Planning and
control in JIT systems is achieved through the use of Kanban. Kanban enables waste elimination from the
system by preventing over production and exposing problems in processes. JIT systems utilize a Pull type
scheduling. Pull type scheduling are very effective in providing visible control of the processes and
bringing the problems to the surface rapidly. The number of Kanbans required is a function of production
and conveyance lead time, size of the standard container and the demand rate. Organizations make
improvements either in a step mode or a gradual mode. The step mode improvement happens on account
of radical innovations. On the other hand, gradual mode improvements happen on account of continuous

improvements. A continuous improvement does not require any radically new technology or product. It
concentrates on improving the effectiveness of existing processes in small steps. The term lean
enterprise more appropriately describes a way of thinking about manufacturing, service, and support
processes that is now used increasingly across a wide variety of companies and product offerings.
Service-oriented companies that employ lean practices include Bank of America, Park Nicollet Health
Services in Minneapolis, Minn., Jefferson Pilot Financial (Insurance), and Fujitsu Services (Technical
Help Desk Services).Many opportunities exist to improve operations performance in manufacturing,
services, education, healthcare, and financial services through the use of lean concepts that identify and
eliminate waste. These improvements benefit all of the stakeholders of the organization, from the
shareholders who provide capital to the customers who buy its goods and services. Society also benefits
as the waste traditionally embedded in the operating processes is removed, freeing up scarce resources for
other uses.
Lean manufacturing and other lean methods are the key to unleashing these improvements. In lean
organizations, customer demand sets the pace of demand fulfillment. Lean companies organize their
productsboth physical products and service productsso they are made available when the customer
requires them. Lean companies refer to takt time; the rate of demand from the customers. If a product has
a one-hour takt time, this means that (on average) the customers need one per hour throughout the
working day. The significance of takt time is that lean organizations establish their processes so that
products and services are made or provided at the same rate as the customer is requiring (or pulling) the
products. This takt time applies not just to the primary processes but all support processes, including order
entry, engineering, purchasing, scheduling, and so forth.
CONCLUSION
Lean production takes time to master. Lean production is a model for the future. It may well become an
essential element of a sustainable global strategy. Customers cannot be expected to pay for waste, nor can
a worker be paid very much for producing waste. To be lean is to optimize the use of resources to create
value for customers and stakeholders. It is a formula for success that is as old as it is new, as Western as it
is Eastern.