The Importance of Lean Management in the Business World

Efficiency in business is defined as the performance of operational tasks without wasting energy, labor, time, money and materials. The success and competitiveness of a business depends on the efficient fulfillment of operational tasks. To achieve this, it is necessary to adopt a culture of continuous improvement in all areas of operations. As a powerful business model, Lean Manufacturing encourages businesses to create a culture of continuous improvement. This blog post explains how Lean works and the benefits it brings to companies.

What is Lean Production? How does it work?

Lean Thinking is a methodology that strives to make production processes efficient by eliminating factors that it defines as waste. According to the methodology, anything that does not add value to the customer is waste. There are seven factors that cause waste: faulty production, overproduction, overstock, waiting, unnecessary work, unnecessary transportation and unnecessary movement. By preventing the generation of these wastes, businesses can improve quality and meet customer needs.

7 Types of Waste in Lean Production

  1. Faulty Production

Defective Production is a type of waste that occurs when a product needs to be corrected or reworked due to defects. A defectively produced product does not meet the customer’s expectations, so it has to be replaced.  To fix the product, machines and people have to work again. This wastes energy and labor and negatively affects customer satisfaction. To prevent product defects, businesses can identify potential defects and work to eliminate them.  Poka – yoke, one of the lean techniques, is the best technique that can be used to identify and prevent potential defects.

  1. Overproduction

Producing more of a product than demanded causes excessive production waste. Overproduced products also cause costs such as storage and materials, and thus damage the business in terms of cost.

Lean production adopts the principle of “just-in-time production” to prevent this type of waste. This principle advocates limited production according to customer demands instead of predictive production. When businesses produce on demand, they can eliminate the costs incurred due to product deterioration, obsolescence or storage.

  1. Unnecessary Inventory

Anything that is overstocked or held, whether raw materials, production equipment, finished goods or labor, leads to waste. Therefore, businesses should stop overstocking and keep what is needed.

  1. Excessive Waiting

Waiting refers to the time wasted waiting for a machine, supplier or worker at a stage of the production chain. For example, if a task takes too much time, the waiting time of the worker responsible for the next task increases. This leads to waiting waste.

  1. Overprocessing

Any unnecessary application in the production process results in excessive process waste. For example, waste occurs when a feature is added to a product that the customer has not requested and does not want to pay for.

  1. Unnecessary Transportation

Moving equipment, raw materials or anything from one place to another is wasteful. To eliminate this waste, a flow should be implemented to minimize the distance between processes leading to the final product. For example, in a food company, packaging and shipping units should be strategically located close to each other to minimize unnecessary transportation and reduce the associated loss of labor and time.

  1. Excessive Movement

In a poorly organized production line or workplace, unnecessary movement of workers or equipment to perform a task leads to waste. This wears and tear on both workers and machines.

Why is Lean Management Important?

Lean management provides numerous benefits to companies that significantly impact their overall success. There are six key categories that highlight why lean is important and how it leads to success. Let’s explore these categories:

Customer-Oriented Culture

The primary focus of lean management is to understand and provide value to customers. For this reason, it considers anything that the customer does not value as waste and aims to create a customer-oriented culture. A customer-centric culture encourages businesses to remain innovative, adaptable and adapt to trends.

Corporate Compliance

One of the most valuable techniques in lean management is Value Stream Mapping. This process involves charting each process or activity that contributes to customer value and analyzing their relationships. By understanding the customer’s perspective, the company’s mission and values, employees gain clarity on the purpose of their work.  This alignment around a common purpose simplifies decision-making by reducing disagreements and friction. Once employees understand how their work relates to strategic goals, individual performance evaluation focuses on criteria that align with the company’s purpose.

Empowering Employees

Lean management values its employees because it places a high value on respecting people. It believes that employees doing a job will identify and implement the best opportunities for improvement. Therefore, the methodology encourages active employee participation in problem solving and decision making. Employee participation increases their sense of ownership and motivation.

Standardization and Structure

Lean management places great emphasis on standardization to ensure consistency, reduce errors and enable rapid problem solving. Standardization does not prevent innovation, but provides a basis for monitoring and measuring improvements. By documenting the standards created by process operators, companies can assess the impact of future changes.

5 Basic Principles of Lean Management

Lean production focuses on five key principles.

  1. Value is determining value from the customer’s perspective. To determine value, it is necessary to understand what the customer really wants and why they are willing to pay for it.
  2. The value stream is determined by mapping the entire process from raw materials to the delivery of the final product or service to the customer. Lean production identifies and eliminates all steps that do not add value to the final product.
  3. It is necessary to create a smooth and continuous flow in the production process. The aim of this principle is to eliminate bottlenecks, minimize interruptions and eliminate unnecessary back and forth movement of materials.
  4. Implementing a pull-based system instead of a push-based system helps to match production with customer demand. This means producing only what is needed when it is needed, based on customer orders, rather than producing excess inventory.
  5. Continuous improvement is a key principle in lean manufacturing. By continuously striving for excellence and eliminating waste (also known as muda), companies can improve efficiency, quality and customer satisfaction.

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