What lean means
Lean management is an approach to running an organisation that focuses on delivering value to the customer while reducing waste. It grew out of the Toyota Production System, developed at Toyota in Japan, and the word “lean” was popularised in the West later. Today it is applied well beyond manufacturing, including in offices, healthcare and software.
The five lean principles
A widely used summary of lean describes five principles:
- Define value: decide what the customer actually values.
- Map the value stream: identify every step needed to deliver that value.
- Create flow: make work move through the steps without delays.
- Establish pull: produce based on demand rather than forecasts alone.
- Seek perfection: keep improving continuously.
Waste terms
- Value-added activity: a step the customer would be willing to pay for.
- Waste (muda): an activity that consumes resources but does not add value.
- Mura: unevenness in workload or output.
- Muri: overburden of people or equipment.
- The eight wastes: commonly listed as defects, overproduction, waiting, non-utilised talent, transportation, inventory, motion and extra processing. Some versions use different wording, and a popular memory aid is the acronym DOWNTIME.
Japanese terms you will hear
- Kaizen: continuous improvement through small, ongoing changes, usually involving the people who do the work. See incremental innovation examples.
- Gemba: “the real place”, meaning where the work happens. A “gemba walk” is when leaders go and observe it.
- Kanban: a visual signalling system, often cards or boards, used to control work and replenishment.
- Poka-yoke: mistake-proofing, designing a process so errors are hard to make.
- Andon: a signal that alerts people to a problem.
- Heijunka: levelling production so work is steady rather than in spikes.
- Jidoka: building quality in by stopping work when a problem appears.
- Just-in-time (JIT): supplying what is needed, when it is needed, in the amount needed.
Tools and methods
- 5S: a workplace organisation method: sort, set in order, shine, standardise, sustain.
- Value stream mapping (VSM): drawing the flow of materials and information to spot waste.
- SMED (single-minute exchange of die): reducing the time it takes to change over equipment from one product to another.
- Standard work: the documented best-known way of doing a task.
- Root cause analysis and the 5 whys: asking “why?” repeatedly, commonly five times, to move from a symptom toward its underlying cause.
- PDCA (plan, do, check, act): a repeating cycle for testing improvements.
- Visual management: using charts, boards and signals so status is obvious at a glance.
Flow and measurement terms
- Cycle time: the time it takes to complete one unit of work at a step.
- Lead time: the time from a customer request to delivery.
- Takt time: the pace of production needed to meet customer demand, usually available time divided by demand.
- Bottleneck: the step that limits overall output.
- WIP (work in progress): work that has started but is not finished.
- Throughput: how much work is completed in a given period.
Inventory-related lean ideas such as just-in-time are discussed further in inventory management terms.
Lean and Six Sigma
Six Sigma is a separate methodology that aims to reduce variation and defects, often through the DMAIC steps (define, measure, analyse, improve, control). Lean Six Sigma combines the two: lean to remove waste and improve flow, Six Sigma to reduce variation. Business analysts often borrow tools such as the five whys; see business analyst terminology for related terms.
Common questions
What does lean mean in business?
Delivering more value with less waste, from the customer’s point of view.
What are the 5 whys?
A questioning technique that asks why a problem happened, then asks why again of each answer, to find a root cause. Five is a rule of thumb, not a requirement.
What is a lean organisational structure?
Generally a structure with few management layers and decisions pushed closer to the work. The term is used loosely, so definitions vary.
What is a lean management system?
The set of practices, routines and tools, such as daily huddles, visual boards and gemba walks, that an organisation uses to run lean day to day.
For the wider vocabulary, see the management terms list.